Interim / Quarterly Report • Sep 5, 2018
Interim / Quarterly Report
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ALLIANZ GROUP INTERIM REPORT 2018
All references to chapters, pages, notes, internet pages, etc. within this report are also linked.
Disclaimer regarding roundings
The condensed consolidated interim financial statements are presented in millions of Euros (€ mn) unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Guideline on Alternative Performance Measures
For further information on the definition of our Alternative Performance Measures and their components, as well as the basis of calculation adopted, please refer to www.allianz.com/results.
Key figures Allianz Group1
| Six months ended 30 June | 2018 | 2017 | Delta | |
|---|---|---|---|---|
| Total revenues2 | € mn | 67,350 | 66,218 | 1,132 |
| Operating profit3 | € mn | 5,753 | 5,860 | (107) |
| Net income3 | € mn | 4,025 | 4,013 | 13 |
| thereof: attributable to shareholders |
€ mn | 3,830 | 3,810 | 20 |
| Solvency II capitalization ratio4 | % | 230 | 229 | 1 %-p |
| Return on equity5 | % | 13.8 | 11.8 | 2.0 %-p |
| Earnings per share | € | 8.86 | 8.45 | 0.41 |
| Diluted earnings per share | € | 8.78 | 8.44 | 0.34 |
Overall, the world economy remains in fairly good shape. However, growth momentum in some major economies showed signs of cooling down at least temporarily in the first months of this year. In the Eurozone, while the economic upswing continued in the first half of 2018, the growth momentum could no longer match last year's very pronounced growth dynamic. Meanwhile in the United States, following a subdued start to the year 2018, the economy picked up speed again in the second quarter, mostly driven by private consumption. In the emerging market world, economic performance in Latin America was somewhat disappointing, while emerging Asia continued to benefit from stable growth in China.
The first half of 2018 was characterized by continued political uncertainty. The trade conflict with the United States intensified, contributing to a deterioration in economic sentiment in some regions. In Italy, political risk increased with regard to the new antiestablishment government. Following a prolonged period of very low market volatility, stock markets experienced a spike in volatility in February when the wage growth and inflation figures released in the United States turned out higher than expected. On the monetary policy front, the European Central Bank announced in June that it would phase out its bond purchasing program at the end of 2018 – provided that the economy performs in line with its expectations. As of October, the monthly purchase volume will be reduced from € 30 bn to € 15 bn. In the United States, the Federal Reserve continued to normalize its monetary policy stance. It increased the federal
funds rate range twice by 25 basis points, bringing it to a range of 1.75% to 2%, while continuing its balance sheet normalization program.
Yields on 10-year German government bonds closed the month of June at 0.31%, 12 basis points below the level reached at the end of 2017. Spreads on Eurozone government bonds moved more or less sideways in the first half of 2018, with Italy as one major exception. Spreads on Italian government bonds widened substantially by 73 basis points on the back of heightened political uncertainty. Major stock markets around the globe registered losses, with downward corrections being most pronounced in emerging market economies. The U.S. Dollar-to-Euro exchange rate was subject to significant fluctuations in the first half of this year. Following an appreciation in early 2018, the Euro started to weaken against the U.S. Dollar in mid-April. This depreciation more than compensated for the appreciation at the beginning of the year; at the end of June 2018 the U.S. Dollar-to-Euro exchange rate was 1.17 (end of 2017: 1.20).
Despite the higher market volatility and continued suppression of yields, there was also some unexpected relief for the insurance industry: Insured losses due to natural catastrophes were significantly lower than usual, at least at the global level. In Europe and the United States, however, winter storms caused relatively high losses.
The high volatility of global capital market indices also muted the long-term flows in the asset management industry at a global level. After a strong start, long-term net inflows significantly diminished in the United States and Europe, dipping into negative territory in some months. In the United States, taxable bond flows, both passive and active, remained strong throughout the first half of 2018 while there was a trend towards de-risking with outflows in high-yield and emerging-market bonds and trending into very short-duration fixed-income and core intermediary bonds. Overall, long-term flows into passive products in the United States continue to strongly outpace flows into active. In Europe, passive have shown much higher organic growth rates than active; however, in absolute terms, flows into actively managed funds continue to dominate.
1_For further information on Allianz Group figures, please refer to note 4 to the condensed consolidated interim financial statements.
2_Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating revenues in Asset Management, and total revenues in Corporate and Other (Banking).
3_The Allianz Group uses operating profit and net income as key financial indicators to assess the performance of its business segments and of the Group as a whole.
4_2017 figures as of 31 December 2017, 2018 figures as of 30 June 2018. Risk capital figures are group diversified at 99.5 % confidence level.
5_Represents the annualized ratio of net income attributable to shareholders to the average shareholders' equity excluding unrealized gains/losses on bonds, net of shadow accounting, at beginning of the period and at the end of the period. Annualized figures are not a forecast for full year numbers. For 2017, the return on equity for the full year is shown.
Our total revenues grew 1.7%, in the first half of 2018 – an increase of 5.6% on an internal basis1 , compared to the same period of the previous year, with all business segments registering strong growth.
Our operating investment result declined by € 1,114 mn to € 10,969 mn compared to the more favorable first half-year of 2017. We recorded higher impairments, mostly on equities, particularly in the first quarter of 2018 when there was a downturn of major equity markets. In addition, low reinvestment yields led to a decline in income from debt securities; also, operating realized gains/losses (net) decreased as a result of lower debt realizations.
Our operating profit decreased due to a lower investment margin in our U.S. Life/Health business – a result of normalized market conditions and unfavorable foreign currency translation effects – as well as a lower operating result in our Corporate and Other business segment. The segment had benefited from a positive impact in the prior year related to the adapted cost allocation scheme for the pension provisions. Both our Asset Management business segment and our Property-Casualty business segment saw an increase in operating profit: Asset Management enjoyed higher assets under management (AuM)-driven revenues, mainly due to growth in average third-party AuM. For Property-Casualty, the key driver was a higher underwriting result.
Our non-operating result worsened by € 125 mn, resulting in a loss of € 388 mn. A negative impact from the sale of our traditional life insurance portfolio in Taiwan was partially offset by lower restructuring charges.
Income taxes decreased by € 244 mn to € 1,340 mn, driven by the U.S. tax reform and the reduction in pretax income. The effective tax rate dropped to 25.0% (28.3%).
The decrease in income taxes offset the lower operating profit and non-operating result, leading to an overall stable net income.
Our shareholders' equity2 decreased by € 5.3 bn to € 60.3 bn. Of this decrease, € 3.4 bn was attributable to the dividend payout and € 2.0 bn to the second share buy-back program announced in November 2017: In the course of the first half-year of 2018, Allianz SE purchased 10.4 million own shares. 3 Over the same period, our Solvency II capitalization ratio rose to 230%.
For a more detailed description of the results generated by our business segments – Property-Casualty insurance operations, Life/Health insurance operations, Asset Management, and Corporate and Other – please consult the respective chapters on the following pages.
In our Annual Report 2017, we have described our risk and opportunity profile and addressed potential risks that could adversely affect our business as well as our risk profile. The statements contained in that report remain largely unchanged. We continue to
3_For further information on the share buy-back program, please refer to note 17 to the condensed consolidated interim financial statements.
monitor developments in order to be able to react in a timely and appropriate manner, should the need arise. For further information, please refer to the chapter Outlook, which starts on page 12.
For information on events after the balance sheet date, please refer to note 33 to the condensed consolidated interim financial statements.
Effective 1 January 2018 and 1 April 2018, the Allianz Group reorganized the structure of its insurance activities to reflect the changes in the responsibilities of the Board of Management. Middle East and Africa were reallocated to the reportable segment Global Insurance Lines & Anglo Markets, Middle East and Africa. The reportable segment Iberia & Latin America was combined with the reportable segment Allianz Partners to form the reportable segment Iberia & Latin America and Allianz Partners. Previously reported information has been adjusted to reflect this change in the composition of the Allianz Group's reportable segments.
Additionally, some minor reallocations between the reportable segments have been made.
The Allianz Group's strategy is described in the Risk and Opportunity Report that forms part of our Annual Report 2017. There have been no material changes to our Group strategy.
For an overview of the products and services offered by the Allianz Group as well as of sales channels, please refer to the Business Operations chapter in our Annual Report 2017.
The Allianz Group operates and manages its activities through the four business segments mentioned above. For further information, please refer to note 4 to the condensed consolidated interim financial statements or to the Business Operations chapter in our Annual Report 2017.
1_Internal total revenue growth excludes the effects of foreign currency translation as well as acquisitions and disposals. Please refer to page 16 for a reconciliation of nominal total revenue growth to internal total revenue growth for each of our business segments and the Allianz Group as a whole.
2_For further information on shareholders' equity, please refer to page 14 of the Balance Sheet Review chapter.
Key figures Property-Casualty1234
| Six months ended 30 June | 2018 | 2017 | Delta | |
|---|---|---|---|---|
| Gross premiums written | € mn | 29,984 | 29,388 | 595 |
| Operating profit | € mn | 2,729 | 2,705 | 24 |
| Net income | € mn | 2,244 | 2,070 | 174 |
| Loss ratio2 | % | 66.4 | 66.0 | 0.3 %-p |
| Expense ratio3 | % | 28.0 | 28.6 | (0.6)%-p |
| Combined ratio4 | % | 94.4 | 94.6 | (0.2)%-p |
On a nominal basis, we recorded an increase of 2.0% in gross premiums written compared to the first six months of the previous year. This includes unfavorable foreign currency translation effects of € 1,157 mn6 and positive (de)consolidation effects of € 22 mn. Further, our premiums went up 5.9% on an internal basis, driven by a positive volume effect of 4.3% and a positive price effect of 1.6%.
The following operations contributed positively to internal growth:
AGCS: Gross premiums increased to € 4,371 mn – up 16.9% on an internal basis. Much of this was a result of positive volume effects at Allianz Risk Transfer.
Germany: Gross premiums amounted to € 6,521 mn, an internal growth of 4.3%. It was mainly due to positive volume effects in our motor and commercial property insurance business and in our APR business (accident insurance with premium refunds).
Allianz Partners: Gross premiums grew to € 2,768 mn – an increase of 5.5% on an internal basis. It was owed to positive volume effects at Worldwide Care and our U.S. travel business.
In the first six months of 2018, there were no operations with a significant negative contribution to internal growth.
Operating profit
| 2018 | 2017 | Delta |
|---|---|---|
| 1,185 | 1,136 | 49 |
| 1,482 | 1,490 | (8) |
| 62 | 79 | (17) |
| 2,729 | 2,705 | 24 |
1_Consists of fee and commission income/expenses and other income/expenses.
Our operating profit increased slightly, compared to the same period of the previous year. Although we registered higher claims from natural catastrophes than we had in the benign prior year, our underwriting result increased, driven by profitability and efficiency improvements across our operating entities. Our investment result remained relatively stable compared to the previous year.
A strong improvement on the expense side was offset by higher claims when compared to the previous year. In addition, we saw a small improvement in our run-off result. Overall, our combined ratio improved by 0.2 percentage points to 94.4%.
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Premiums earned (net) | 23,742 | 23,557 | 185 |
| Accident year claims | (16,572) | (16,326) | (246) |
| Previous year claims (run-off) | 813 | 770 | 43 |
| Claims and insurance benefits incurred (net) | (15,759) | (15,556) | (203) |
| Acquisition and administrative expenses (net) |
(6,657) | (6,739) | 82 |
| Change in reserves for insurance and investment contracts (net) (without expenses |
|||
| for premium refunds)1 | (142) | (127) | (15) |
| Underwriting result | 1,185 | 1,136 | 49 |
1_Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of "change in reserves for insurance and investment contracts (net)". For further information, please refer to note 24 to the condensed consoliated interim financial statements.
Our accident year loss ratio7 stood at 69.8% – a 0.5 percentage point deterioration compared to the first half of last year. In the first six months of this year, losses from natural catastrophes were higher than in the same period of 2017, increasing the impact on our combined ratio by 0.9 percentage points, from 1.1% to 2.0%.
Excluding losses from natural catastrophes, our accident year loss ratio improved to 67.8%. This was mainly due to profitability improvements across the Allianz Group.
1_For further information on Property-Casualty figures, please refer to note 4 to the condensed consolidated interim financial statements.
4_Represents the total of acquisition and administrative expenses (net) and claims and insurance benefits incurred (net) divided by premiums earned (net).
5_We comment on the development of our gross premium written on an internal basis, which means figures have been adjusted for foreign currency translation and (de-)consolidation effects in order to provide more comparable information.
6_Based on the average exchange rates in 2018 compared to 2017.
7_Represents claims and insurance benefits incurred (net) less previous year claims (run-off), divided by premiums earned (net).
The following operations contributed positively to the development of our accident year loss ratio:
AGCS: 0.4 percentage points. This was driven by an improvement in small and medium claims.
Australia: 0.3 percentage points. The improvement resulted from positive price effects and better loss experience in our short-tail business.
Italy: 0.1 percentage points. The accident year loss ratio benefited from a decrease in severity of losses in our motor insurance business as well as from lower claims from weather-related events.
The following operations weighed on the development of our accident year loss ratio:
Germany: 0.8 percentage points due to storms, mainly Friederike in 2018, with losses from natural catastrophes of more than double the amount recorded in the same period of 2017.
France: 0.3 percentage points. The deterioration resulted from higher losses from storms and floods in the first half of 2018.
Reinsurance: 0.2 percentage points. This was driven by the higher natural catastrophe environment than in the first half of 2017.
Our positive run-off result amounted to € 813 mn, compared to € 770 mn in the first half-year of 2017. This translates into a run-off ratio of 3.4%, which is slightly higher than the 3.3% we saw in the prior year. The previous year had been impacted by the Ogden rate change, which adversely affected our Reinsurance, United Kingdom, and Ireland operations.
Total expenses amounted to € 6,657 mn in the first half of 2018, compared to € 6,739 mn in the same period of 2017. Our expense ratio decreased by 0.6 percentage points, benefiting from lower acquisition as well as lower administrative expenses.
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Interest and similar income (net of interest expenses) |
1,671 | 1,708 | (37) |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
(19) | (51) | 32 |
| Operating realized gains (net) | 92 | 152 | (61) |
| Operating impairments of investments (net) | (28) | (6) | (22) |
| Investment expenses | (183) | (183) | 1 |
| Expenses for premiums refunds (net)1 | (51) | (131) | 80 |
| Operating investments income (net)2 |
1,482 | 1,490 | (8) |
1_Refers to policyholder participation, mainly from APR business (accident insurance with premium refunds), and consists of the investment-related part of "change in reserves for insurance and investment contracts (net)". For further information, please refer to note 24 to the condensed consolidated interim financial statements.
2_The operating investment income (net) of our Property-Casualty business segment consists of the operating investment result – as shown in note 4 to the condensed consolidated interim financial statements – and expenses for premium refunds (net) (policyholder participation).
Our operating investment income (net) remained relatively stable in the first six months of 2018. We recorded lower interest and similar income; much of this deterioration was attributable to debt securities as a result of lower volumes and the low-yield environment. The decline was partially offset by higher income from equities.
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Fee and commission income | 868 | 911 | (44) |
| Other income | 1 | 32 | (31) |
| Fee and commission expenses | (806) | (864) | 58 |
| Other expenses | (1) | - | - |
| Other result | 62 | 79 | (17) |
Our other result decreased, as the prior year had included higher realized gains from the sale of real estate held for own use by our Italian subsidiary. This could only partially be offset by a higher net fee and commission result generated by Allianz Partners.
Net income increased, mainly because lower restructuring charges and higher realized gains resulted in a higher non-operating result.
Key figures Life/Health1
| Six months ended 30 June | 2018 | 2017 | Delta | |
|---|---|---|---|---|
| Statutory premiums2 | € mn | 34,229 | 33,619 | 610 |
| Operating profit | € mn | 2,144 | 2,282 | (138) |
| Net income | € mn | 1,322 | 1,611 | (289) |
| Return on equity3 | % | 10.9 | 12.1 | (1.2) %-p |
On a nominal basis, statutory premiums increased by 1.8 % in the first half of 2018. This includes unfavorable foreign currency translation effects of € 996 mn and negative (de-)consolidation effects of € 39 mn. On an internal basis4 , statutory premiums increased by € 1,645 mn – or 4.9% – to € 35,225 mn.
In the German life business, statutory premiums rose to € 10,876 mn, an increase of 7.6% on an internal basis. We recorded higher sales in our business with capital-efficient products, which more than offset the decline in sales of traditional life products. In the German health business, statutory premiums went up to € 1,729 mn, a 3.3% growth on an internal basis, driven by the acquisition of new customers in supplementary health care coverage.
Statutory premiums in the United States amounted to € 4,627 mn, up 1.8% on an internal basis. This was caused by an increase in sales of non-traditional variable annuities which was partly offset by declined fixed-indexed annuity sales.
In Italy, statutory premiums rose to € 5,682 mn, an increase of 1.9% on an internal basis. This was predominantly due to a higher volume of recurring premiums from our in-force business, partially offset by a decrease in traditional life business.
In France, statutory premiums stood at € 4,081 mn. The decrease – 1.6% on an internal basis – was largely due to a drop in guaranteed savings & annuities, partly compensated by sales of unit-linkedwithout-guarantee products.
In the Asia-Pacific region, statutory premiums went up to € 2,961 mn, a 27.5% rise on an internal basis. It was largely attributable to a sales increase for unit-linked products in Taiwan and traditional products in China.
Our PVNBP increased by € 989 mn to € 31,423 mn, which mainly resulted from the higher sales of capital-efficient products in the German life business and our unit-linked insurance products without guarantees in Taiwan. This was partly offset by a sales decline of unitlinked products in Italy. In line with our changed product strategy, premiums continued to shift towards capital-efficient products.
| % | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Guaranteed savings & annuities | 17.8 | 23.6 | (5.7) |
| Protection & health | 17.3 | 16.7 | 0.6 |
| Unit-linked without guarantee | 27.2 | 26.1 | 1.1 |
| Capital-efficient products | 37.7 | 33.6 | 4.1 |
| Total | 100.0 | 100.0 | - |
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Loadings and fees | 3,002 | 2,949 | 53 |
| Investment margin | 1,922 | 2,082 | (161) |
| Expenses | (3,395) | (3,349) | (45) |
| Technical margin | 627 | 549 | 78 |
| Impact of changes in DAC | (11) | 52 | (63) |
| Operating profit | 2,144 | 2,282 | (138) |
Our operating profit decreased as a result of normalized market conditions and unfavorable foreign currency translation effects mainly in the United States. This was partly offset by a higher investment margin in Germany and higher income from unit-linked business in Italy and Taiwan.
1_For further information on Life/Health figures, please refer to note 4 to the condensed consolidated interim financial statements.
2_Statutory premiums are gross premiums written from sales of life and health insurance policies, as well as gross receipts from sales of unit-linked and other investment-oriented products, in accordance with the statutory accounting practices applicable in the insurer's home jurisdiction.
3_Represents annualized ratio of net income to the average total equity, excluding unrealized gains/losses on bonds, net of shadow accounting, at the beginning of the period and at the end of period. Annualized figures are not a forecast for full year numbers. For 2017, the return on equity for the full year is shown.
4_Our comments in the following section on the development of our statutory gross premiums written refer to figures determined "on an internal basis", i.e. adjusted for foreign currency translation and (de-)consolidation effects, in order to provide more comparable information.
5_PVNBP before non-controlling interests.
6_The purpose of the Life/Health operating profit sources analysis is to explain movements in IFRS results by analyzing underlying drivers of performance on a Life/Health business segment consolidated basis.
€ mn
| Six months ended 30 June | 2018 | 2017 | Delta |
|---|---|---|---|
| Loadings from premiums | 1,933 | 1,916 | 17 |
| Loadings from reserves | 726 | 720 | 6 |
| Unit-linked management fees | 343 | 313 | 30 |
| Loadings and fees | 3,002 | 2,949 | 53 |
| Loadings from premiums as % of statutory premiums |
5.6 | 5.7 | (0.1) |
| Loadings from reserves as % of average reserves 1,2 |
0.1 | 0.1 | - |
| Unit-linked management fees as % of average unit-linked reserves2,3 |
0.2 | 0.2 | - |
1_Aggregate policy reserves and unit-linked reserves.
2_Yields are pro rata.
3_Unit-linked management fees, excluding asset management fees, divided by unit-linked reserves.
Loadings from premiums went up in line with the higher sales, mainly in the German life business, and Italy. Unit-linked management fees also rose, predominantly in Italy and Taiwan, as a result of increased assets under management.
Investment margin
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Interest and similar income | 8,927 | 9,056 | (129) |
| Operating income from financial assets and liabilities carried at fair value through income (net) |
(1,127) | (965) | (161) |
| Operating realized gains/losses (net) | 2,652 | 2,916 | (263) |
| Interest expenses | (50) | (49) | (1) |
| Operating impairments of investments (net) | (743) | (255) | (488) |
| Investment expenses | (650) | (609) | (42) |
| Other1 | 90 | 271 | (181) |
| Technical interest | (4,365) | (4,401) | 35 |
| Policyholder participation | (2,813) | (3,882) | 1,069 |
| Investment margin | 1,922 | 2,082 | (161) |
| Investment margin in basis points2,3 | 44.1 | 49.3 | (5.2) |
1_"Other" comprises the delta of out-of-scope entities, on the one hand, which are added here with their respective operating profit, and different line item definitions compared to the financial statements, such as interest paid on deposits for reinsurance, fee and commission income, and expenses excluding unit-linked management fees, on the other hand.
2_Investment margin divided by the average of current end-of-period and previous end-of-period aggregate policy reserves.
3_Yields are pro rata.
Our investment margin decreased, largely due to negative foreign currency impacts in the United States. In addition, the prior period results benefited from favorable market conditions for the variable annuities business in the United States. Higher equity impairments and lower realizations on debt securities mainly in the German life business, after the sale of Italian government bonds has resulted in an elevated level in 2017, further contributed to the decrease in the investment margin. This was largely offset by the lower policyholder participation.
2_The investment margin is defined as IFRS investment income net of expenses, less interest credited to IFRS reserves and policyholder participation (including policyholder participation beyond contractual and regulatory requirements mainly for the German life business).
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Acquisition expenses and commissions | (2,494) | (2,451) | (43) |
| Administrative and other expenses | (901) | (898) | (2) |
| Expenses | (3,395) | (3,349) | (45) |
| Acquisition expenses and commissions as % of PVNBP1 |
(7.9) | (8.1) | 0.1 |
| Administrative and other expenses as % of average reserves2, 3 |
(0.2) | (0.2) | - |
| 1_PVNBP before non-controlling interests. 2_Aggregate policy reserves and unit-linked reserves. |
3_Yields are pro rata.
Our acquisition expenses and commissions increased in line with the sales growth mainly recorded in our German life business and in Taiwan. In addition, we recorded higher production in the more expensive bancassurance channel in Italy.
Administrative and other expenses remained stable, also in relation to reserves.
Our technical margin went up, as the first half of 2017 was negatively impacted by one-off reserve adjustments predominantly in Spain.
€ mn
| Six months ended 30 June | 2018 | 2017 | Delta |
|---|---|---|---|
| Capitalization of DAC | 858 | 866 | (8) |
| Amortization, unlocking and true-up of DAC | (869) | (814) | (55) |
| Impact of change in DAC | (11) | 52 | (63) |
The impact of change in DAC turned slightly negative. A one-off DAC adjustment in the United States had a positive effect on the 2017 result.
1_Expenses include acquisition expenses and commissions (excluding commission clawbacks, which are allocated to the technical margin) as well as administrative and other expenses.
Operating profit by lines of business
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Guaranteed savings & annuities | 1,091 | 1,216 | (125) |
| Protection & health | 465 | 457 | 8 |
| Unit-linked without guarantee | 208 | 185 | 23 |
| Capital-efficient products | 381 | 425 | (44) |
| Operating profit | 2,144 | 2,282 | (138) |
The operating profit in our guaranteed savings & annuities line of business dropped, which was mainly due to a normalization of results in our traditional variable annuity business in the United States after the favorable market conditions in the first six months of 2017. The slightly higher operating profit in the protection & health line of business was most due to a higher investment margin in Spain. Our operating profit in the unit-linked without guarantee line of business went up, which was largely driven by higher unit-linked fees in Italy and Taiwan. A decrease in operating profit in the capital-efficient products line was mainly attributable to lower investment margin in the United States as a result of unfavorable foreign currency effects.
The decrease in our net income was largely attributable to the sale of our traditional life insurance portfolio in Taiwan, which had a negative net impact of € 218 mn.
Our return on equity decreased by 1.2 percentage points to 10.9%, predominantly due to the drop in our net income.
2_The technical margin comprises risk result (risk premiums less benefits in excess of reserves less policyholder participation), lapse result (surrender charges and commission clawbacks) and reinsurance result.
3_"Impact of change in DAC" includes effects of change in DAC, unearned revenue reserves (URR) and value of business acquired (VOBA). It represents the net impact of deferral and amortization of acquisition costs and front-end loadings on operating profit and therefore deviates from the IFRS financial statements.
€ bn
Key figures Asset Management1
| Six months ended 30 June | 2018 | 2017 | Delta | |
|---|---|---|---|---|
| Operating revenues | € mn | 3,257 | 3,114 | 143 |
| Operating profit | € mn | 1,247 | 1,156 | 91 |
| Cost-income ratio2 | % | 61.7 | 62.9 | (1.2)%-p |
| Net income | € mn | 934 | 735 | 199 |
| Total assets under management as of 30 June3 |
€ bn | 1,993 | 1,960 | 32 |
| thereof: Third-party assets under management as of 30 June3 |
€ bn | 1,464 | 1,448 | 17 |
| Type of asset class | As of 30 June 2018 |
As of 31 December 2017 |
Delta |
|---|---|---|---|
| Fixed income | 1,560 | 1,553 | 7 |
| Equities | 164 | 164 | - |
| Multi-assets1 | 165 | 163 | 2 |
| Other2 | 104 | 81 | 23 |
| Total | 1,993 | 1,960 | 32 |
1_Multi-assets is a combination of several asset classes (e.g. bonds, stocks, cash and real property) used as an investment. Multi-assets class investments increase the diversification of an overall portfolio by distributing investments throughout several asset classes.
2_Other is composed of other asset classes than equity, fixed income and multi-assets, e.g. money markets, commodities, real estate investment trusts, infrastructure investments, private equity investments, hedge funds, etc.
Net inflows4 of total assets under management (AuM) amounted to € 2 bn for the first half of the year. Third-party AuM net inflows were at € 12 bn, due to a strong first quarter of 2018. Almost all of the first half-year's third-party AuM net inflows are attributable to PIMCO, where we recorded € 11 bn, and came from the American and Asia-Pacific regions. AllianzGI also recorded third-party AuM net inflows (€ 0.4 bn) in a difficult business environment.
In the first half-year of 2018, total AuM were negatively impacted by effects from Market and Dividends5 amounting to € 27 bn – due to PIMCO and mainly related to fixed-income assets.
Positive effects from consolidation, deconsolidation, and other adjustments added € 24 bn to total AuM. This is mainly related to the onboarding of Allianz Capital Partners (ACP), which was transferred from the Corporate and Other business segment to the Asset Management business segment (AllianzGI) as of 1 January 2018, adding Allianz Group assets of € 23 bn.
Favorable foreign currency translation effects amounted to € 33 bn. As these more than offset the negative effects from Market and Dividends, total AuM increased by 1.7% compared to the yearend 2017 reaching the highest quarter-end level ever.
In the following section we focus on the development of third-party assets under management.
As of 30 June 2018, the share of third-party AuM by business unit remained stable: 76.9% were attributable to PIMCO (31 December 2017: 76.8%), 23.1% to AllianzGI (31 December 2017: 23.2%).
The shares in asset classes also remained stable overall: Fixedincome assets rose slightly from 76.4% to 76.6% over the first halfyear, equities were at 9.3%, multi-assets at 10.3%, and other at 3.8%. (31 December 2017: 9.4%, 10.2% and 4.0%, respectively).
The shares in third-party assets of both mutual funds and separate accounts6 were quite steady compared to year-end 2017, with mutual funds at 60.1% (31 December 2017: 59.4%) and separate accounts at 39.9% (31 December 2017: 40.6%).
As for the regional allocation of third-party AuM7 , shares shifted slightly towards America (54.6%), while Europe's share declined (33.8%) and that of the Asia-Pacific region remained roughly stable (11.7%) (31 December 2017: 53.4%, 35.1% and 11.5%, respectively). The shift was primarily driven by positive foreign exchange effects and third-party AuM net inflows in the American region.
The overall three-year rolling investment performance8 of our Asset Management business declined slightly over the first half of 2018, with 89 % of third-party assets outperforming their respective benchmarks (31 December 2017: 91%). The decline was driven by both PIMCO's and AllianzGI's three-year rolling investment performance, which went down from 95% to 93% and from 75% to 67%, respectively.
1_For further information on Asset Management figures, please refer to note 4 to the condensed consolidated interim financial statements.
2_Represents operating expenses divided by operating revenues.
3_2017 figure as of 31 December 2017.
4_Net flows represent the sum of new client assets, additional contributions from existing clients – including dividend reinvestment – withdrawals of assets from, and termination of, client accounts and distributions to investors.
5_Market and Dividends represents current income earned on, and changes in the fair value of, securities held in client accounts. It also includes dividends from net investment income and from net realized capital gains to investors of open ended mutual funds and of closed end funds.
6_Mutual funds are investment vehicles (in the United States, investment companies subject to the U.S. code; in Germany, vehicles subject to the "Standard-Anlagerichtlinien des Fonds" Investmentgesetz) where the money of several individual investors is pooled into one account to be managed by the asset manager, e.g. open-end funds, closed-end funds. Separate accounts are investment vehicles where the money of a single investor is directly managed by the asset manager in a separate dedicated account (e.g. public or private institutions, high net worth individuals, and corporates). 7_Based on the location of the asset management company.
8_Three-year rolling investment performance reflects the mandate-based and volume-weighted three-year investment success of all third-party assets that are managed by Allianz Asset Management's portfolio-management units. For separate accounts and mutual funds, the investment success (valued on the basis of the closing prices) is compared with the investment success prior to cost deduction of the respective benchmark, based on various metrics. For some mutual funds, the investment success, reduced by fees, is compared with the investment success of the median of the respective Morningstar peer group (a position in the first and second quartile is equivalent to outperformance).
Our operating revenues went up by 4.6% – a 10.9% plus on an internal basis1 . The inclusion of ACP added € 78 mn net revenues in the first half of 2018.
We recorded higher performance fees, due to an increase in AllianzGI's fees, due to operating-profit-neutral carried interest from ACP.
Other net fee and commission income rose, driven by increased average third-party AuM at PIMCO and an increase in third-party AuM-driven margins mainly due to a more favorable asset mix.
Other operating revenues decreased, which was largely due to favorable foreign currency translation effects in the first half of 2017.
Our operating profit increased by 7.9% on a nominal basis and 17.3% on an internal basis1 , driven by growth in revenues due to higher margins and higher average third party AuM.
The increase in administrative expenses resulted mainly from higher personnel expenses at AllianzGI, particularly due to a mostly operating-profit-neutral rise associated with the ACP transfer.
Our cost-income ratio improved by 1.2 percentage points, despite the inclusion of ACP, as revenue growth outpaced the increase in expenses.
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Performance fees | 166 | 149 | 17 |
| Other net fee and commission income | 3,083 | 2,926 | 157 |
| Other operating revenues | 7 | 38 | (31) |
| Operating revenues | 3,257 | 3,114 | 143 |
| Administrative expenses (net), excluding | |||
| acquisition-related expenses | (2,010) | (1,958) | (52) |
| Operating expenses | (2,010) | (1,958) | (52) |
| Operating profit | 1,247 | 1,156 | 91 |
The increase in our net income was driven by the higher operating profit as well as a lower effective tax rate due to the U.S. tax reform.
Key figures Corporate and Other1
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| Operating revenues | 1,320 | 1,680 | (359) |
| Operating expenses | (1,698) | (1,945) | 246 |
| Operating result | (378) | (265) | (113) |
| Net income (loss) | (481) | (456) | (25) |
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | Delta |
| HOLDING & TREASURY | |||
| Operating revenues | 905 | 1,044 | (139) |
| Operating expenses | (1,347) | (1,387) | 40 |
| Operating result | (442) | (343) | (99) |
| BANKING | |||
| Operating revenues | 333 | 519 | (186) |
| Operating expenses | (304) | (462) | 158 |
| Operating result | 29 | 57 | (28) |
| ALTERNATIVE INVESTMENTS | |||
| Operating revenues | 87 | 121 | (33) |
| Operating expenses | (53) | (100) | 47 |
| Operating result | 35 | 20 | 14 |
In the Corporate and Other business segment, our operating result deteriorated over the first half-year, as improvements in Alternative Investments were more than offset by a decline in Holding & Treasury and Banking.
Our net loss increased slightly: While we did record a higher nonoperating investment result, it could not fully offset the deterioration in our operating result and the higher restructuring charges we faced.
In Holding & Treasury, the deterioration of our operating result was mainly driven by the absence of a positive impact of € 148 mn recorded in the previous year's period, related to the adapted cost allocation scheme for the pension provisions.
The reportable segment Banking also registered a lower operating result, largely due to the disposal of Oldenburgische Landesbank AG in the first quarter of 2018.
Alternative Investments generated a higher operating result compared to last year's period, much of which resulted from an increase in interest and similar income.
1_Consolidation included. For further information on Corporate and Other figures, please refer to note 4 to the condensed consolidated interim financial statements.
Prospects for the world economy remain favorable overall in midyear 2018. Nevertheless, political and economic risks have increased, in particular with regard to rising trade tensions. However, we do not expect any noticeable intensification of protectionist measures at the global level. Helped by the expansionary fiscal policy, we expect the U.S. economy to grow by 2.9% in real terms in 2018. In the Eurozone, GDP growth is likely to exceed 2% again in 2018. Apart from the favorable global backdrop, ongoing support from the European Central Bank's loose monetary policy coupled with a somewhat looser fiscal policy should underpin the economic recovery. As in 2017, emerging-market economies are expected to grow by close to 5%. Asian emerging markets continue to benefit from stable growth in China. The Eastern European countries meanwhile continue to capitalize on the ongoing upturn in the Eurozone. Latin America is lagging behind a bit, mainly because of growth disappointments in Argentina and Brazil. All in all, global output is expected to increase by 3.3% in 2018.
The uncertain global political environment bears the potential for higher financial market volatility. One example of this is the widening of spreads on Italian government bonds in the context of the formation of the new government in the second quarter of 2018. Turning to monetary policy, we expect the Federal Reserve to proceed with the normalization of its monetary policy stance. Two further rate hikes over the course of 2018 look realistic. In addition, the Federal Reserve will continue to rein in its balance sheet moderately. In the Eurozone, the European Central Bank is expected to terminate its monthly bond purchasing program by the end of 2018, after a further reduction of the monthly volume to € 15 bn as of October 2018. No key interest rate hikes are expected before summer 2019. Modestly rising yields on 10-year U.S. government bonds, the good economic situation in the Eurozone, and gradually rising inflation rates are likely to influence investors' interest rate expectations and exert upward pressure on European benchmark bond yields. For 10-year German government bonds, we see yields modestly climbing to slightly below 1% until the end of 2018; yields on 10-year U.S. government bonds may end the year at about 3.3%. While the ongoing Federal Reserve rate-hiking cycle will weigh on the Euro, the solid recovery in the Eurozone will act as a support factor. We expect the Dollar-to-Euro exchange rate to close the year at about 1.10 (2017: 1.20).
Our outlook for 2018 remains largely unchanged, although we are now a little more cautious than at the start of the year. While higher global economic activity supports top-line growth, increased market volatility and suppressed yields continue to put pressure on investment income. Further strain on the bottom line is exerted by the unabated need to build new digital business models.
In the property-casualty sector, the specter of a trade conflict puts premium growth at risk. However, as long as trade disputes remain contained, the impact on overall economic activity is manageable. In that case, against the backdrop of an ongoing recovery and increasing inflation, global premium should continue to grow.
In the life sector, global premium growth is mainly driven by Asian emerging markets and in particular by China. With no signs that economic growth falters in the latter, demand for life products will continue to expand strongly in these markets. By contrast, premium growth in mature markets will remain rather moderate, although the ongoing transformation of the business towards more customeroriented products should help to revive demand. All in all, we expect global premium revenues to increase.
1_The information presented in the sections "Economic outlook", "Insurance industry outlook" and "Asset management industry outlook" is based on our own estimates.
Our global economic outlook remains positive overall. In addition, we expect central banks to gradually move further away from accommodative monetary policies, especially in the United States. We therefore expect a more modest capital market contribution to AuM growth. This may weigh on net inflows in certain asset classes while creating opportunities in other areas. For example, investors may look to further de-risk into bonds as yields become more attractive. Furthermore, bonds continue to be particularly interesting for the growing number of retirees in developed countries, as well as for liabilitydriven investors looking for a stable stream of income.
The industry's profitability remains under pressure from both continuous flows into passive products and rising distribution costs. At the same time, advanced analytics and digital channels are expected to continue gaining prominence, as is the trend from traditional towards alternative and solution-oriented products.
Further consolidation across the industry is expected to continue, as in order to pursue growth it is vital for asset managers to keep sufficient business volumes, ensure efficient operations, and maintain strong investment performance.
We are on track to meet the 2018 Allianz Group operating profit outlook of € 11.1 bn, plus or minus € 0.5 bn.
As always, natural catastrophes and adverse developments in the capital markets, as well as factors stated in our cautionary note regarding forward-looking statements may severely affect the results of our operations.
The statements contained herein may include prospects, statements of future expectations, and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance, or events may differ materially from those expressed or implied in such forward-looking statements.
Such deviations may arise due to, without limitation, (i) changes of the general economic conditions and competitive situation, particularly in the Allianz Group's core business and core markets, (ii) performance of financial markets (particularly market volatility, liquidity and credit events), (iii) frequency and severity of insured loss events, including natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates, including the Euro/U.S. Dollar exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions, including related integration issues and reorganization measures, and (xi) general competitive factors, in each case on a local, regional, national, and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.
The company assumes no obligation to update any information or forward-looking statement contained herein, save for any information required to be disclosed by law.
€ mn
| As of 30 June 2018 |
As of 31 December 2017 |
Delta | |
|---|---|---|---|
| Shareholders' equity | |||
| Paid-in capital | 28,928 | 28,928 | - |
| Retained earnings | 25,090 | 27,199 | (2,109) |
| Foreign currency translation adjustment | (2,694) | (2,749) | 55 |
| Unrealized gains and losses (net) | 8,958 | 12,175 | (3,217) |
| Total | 60,282 | 65,553 | (5,271) |
A major share of the decrease in shareholders' equity – € 5,271 mn – was attributable to a dividend payout in May 2018 (€ 3,428 mn) as well as to the second share buy-back program2 , which we carried out between January and May of this year (€ 2,000 mn). In addition, a decline in unrealized gains – mainly from debt securities – decreased the shareholders' equity by € 3,217 mn. The overall decline could only partly be offset by the net income attributable to shareholders, amounting to € 3,830 mn.
The Allianz Group's own funds and capital requirements are based on the market value balance sheet approach as the major economic principle of Solvency II rules.3 Our regulatory capitalization is shown in the following table.
| As of 30 June 2018 |
As of 31 December 2017 |
Delta | ||
|---|---|---|---|---|
| Eligible own funds | € bn | 75.4 | 76.4 | (1.0) |
| Capital requirement | € bn | 32.7 | 33.3 | (0.6) |
| Capitalization ratio | % | 230 | 229 | 1 %-p |
The Solvency II capitalization ratio increased from 229% to 230% over the first six months of 2018. This slight increase was driven by a positive effect of operating Solvency II earnings, mostly offset by regulatory changes, capital management and management actions.
1_This does not include non-controlling interests of € 2,360 mn and € 3,049 mn as of 30 June 2018 and 31 December 2017, respectively. For further information, please refer to note 17 to the condensed consolidated interim financial statements. 2_For further information, please refer to note 17 to the condensed consolidated interim financial statements.
3_Own funds are calculated under consideration of volatility adjustment and yield curve extension, as described on page 69 in the Allianz Group Annual Report 2017.
As of 30 June 2018, total assets amounted to € 896.7 bn (€ 4.6 bn less than at year-end 2017). Total liabilities were € 834.1 bn, representing a rise of € 1.4 bn compared to year-end 2017.
The following section focuses on our financial investments in debt instruments, equities, real estate, and cash, as these reflect the major developments in our asset base.
The following portfolio overview covers the Allianz Group's assets held for investment, which are largely driven by our insurance businesses.
| As of 30 June 2018 |
As of 31 December 2017 |
Delta | As of 30 June 2018 |
As of 31 December 2017 |
Delta | |
|---|---|---|---|---|---|---|
| Type of investment | € bn | € bn | € bn | % | % | %-p |
| Debt instruments; thereof: | 575.6 | 576.1 | (0.5) | 86.1 | 86.7 | (0.6) |
| Government bonds | 213.3 | 213.6 | (0.2) | 37.1 | 37.1 | - |
| Covered bonds | 78.2 | 83.0 | (4.7) | 13.6 | 14.4 | (0.8) |
| Corporate bonds (excl. banks) | 198.0 | 195.6 | 2.4 | 34.4 | 34.0 | 0.4 |
| Banks | 30.1 | 30.6 | (0.4) | 5.2 | 5.3 | (0.1) |
| Other | 55.9 | 53.4 | 2.5 | 9.7 | 9.3 | 0.4 |
| Equities | 64.4 | 60.2 | 4.2 | 9.6 | 9.1 | 0.6 |
| Real estate | 11.6 | 11.4 | 0.1 | 1.7 | 1.7 | - |
| Cash/other | 17.0 | 16.7 | 0.3 | 2.6 | 2.5 | - |
| Total | 668.6 | 664.4 | 4.1 | 100.0 | 100.0 | - |
Compared to year-end 2017, our overall asset allocation remained almost unchanged, even though equities increased slightly.
Our well-diversified exposure to debt instruments remained stable compared to year-end 2017. About 94% of this portfolio was invested in investment-grade bonds and loans.1 Our government bonds portfolio contained, amongst others, bonds from Italy and Spain that represented 3.6%, and 2.0% shares of our debt instruments portfolio with unrealized gains (gross) of € 1,419 mn and € 1,196 mn. Of our covered bonds portfolio, 41.9% (31 December 2017: 41.6%) were German Pfandbriefe backed by either public-sector loans or mortgage loans. French, Spanish, and Italian covered bonds had portfolio shares of 16.1%, 9.0%, and 7.0%, respectively (31 December 2017: 16.3%, 9.2%, and 7.5%).
Our exposure to equities increased due to higher volume. Our equity gearing2 slightly increased to 26% (31 December 2017: 24%).
As of 30 June 2018, the business segment's gross reserves for loss and loss adjustment expenses as well as discounted loss reserves amounted to € 65.8 bn, compared to € 66.2 bn at year-end 2017. On a net basis, our reserves, including discounted loss reserves, increased slightly from € 56.3 bn to € 56.7 bn.3
Life/Health reserves for insurance and investment contracts increased by € 10.8 bn to € 509.8 bn over the first six months of 2018. The € 11.5 bn increase in aggregate policy reserves before foreign currency translation effects was mainly driven by our operations in Germany (€ 7.0 bn) and the United States (€ 5.1 bn before foreign currency translation effects). Reserves for premium refunds decreased by € 3.3 bn (before foreign currency translation effects), due to lower unrealized gains to be shared with policyholders. Foreign currency translation effects increased the balance sheet value by € 2.8 bn, mainly driven by the stronger U.S. Dollar (€ 2.6 bn).
1_Excluding self-originated German private retail mortgage loans. For 3 %, no ratings were available.
2_Equity gearing is defined as the ratio of our equity holdings allocated to the shareholder after policyholder participation and hedges to shareholders' equity plus off-balance sheet reserves less goodwill.
3_For further information about changes in the reserves for loss and loss adjustment expenses for the Property-Casualty business segment, please refer to note 13 to the condensed consolidated interim financial statements.
The previous analysis is based on our condensed consolidated interim financial statements and should be read in conjunction with them. In addition to our figures stated in accordance with the International Financial Reporting Standards (IFRS), the Allianz Group uses operating profit and internal growth to enhance the understanding of our results. These additional measures should be viewed as complementary to, rather than a substitute for, our figures determined according to IFRS.
For further information, please refer to note 4 to the condensed consolidated interim financial statements.
Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating revenues in Asset Management, and total revenues in Corporate and Other (Banking).
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| PROPERTY-CASUALTY | ||
| Gross premiums written | 29,984 | 29,388 |
| LIFE/HEALTH | ||
| Statutory premiums | 34,229 | 33,619 |
| ASSET MANAGEMENT | ||
| Operating revenues | 3,257 | 3,114 |
| consisting of: | ||
| Net fee and commission income | 3,249 | 3,076 |
| Net interest income1 | - | 7 |
| Income from financial assets and liabilities carried at fair value through income (net) |
5 | 31 |
| Other income | 2 | - |
| CORPORATE AND OTHER | ||
| thereof: Total revenues (Banking) | 147 | 275 |
| consisting of: | ||
| Interest and similar income | 65 | 217 |
| Income from financial assets and liabilities carried at fair value through income (net)2 |
2 | 13 |
| Fee and commission income | 262 | 287 |
| Other income | 4 | 3 |
| Interest expenses, excluding interest expenses from external debt |
(14) | (72) |
| Fee and commission expenses | (172) | (172) |
| CONSOLIDATION | (267) | (178) |
| Allianz Group total revenues | 67,350 | 66,218 |
| 1_Represents interest and similar income less interest expenses. |
2_Includes trading income.
We believe that the understanding of our total revenue performance is enhanced when the effects of foreign currency translation as well as acquisitions, disposals, and transfers (or "changes in scope of consolidation") are analyzed separately. Therefore, in addition to presenting nominal total revenue growth, we also present internal growth, which excludes these effects.
| Six months ended 30 June 2018 |
Internal Growth |
Changes in scope of consolidation |
Foreign currency translation |
Nominal Growth |
|---|---|---|---|---|
| Property-Casualty | 5.9 | 0.1 | (3.9) | 2.0 |
| Life/Health | 4.9 | (0.1) | (3.0) | 1.8 |
| Asset Management | 10.9 | 2.3 | (8.6) | 4.6 |
| Corporate and Other | (1.3) | (46.0) | - | (46.5) |
| Allianz Group | 5.6 | (0.2) | (3.7) | 1.7 |
The reconciling item scope comprises the effects from out-of-scope entities in the profit sources reporting compilation. Operating profit from operating entities that are not in-scope entities is included in the investment margin. Currently, 21 entities comprising 99.1% of Life/Health total statutory premiums are in scope.
Expenses comprise acquisition expenses and commissions as well as administrative and other expenses.
The delta shown as definitions in acquisition expenses and commissions represents commission clawbacks, which are allocated to the technical margin. The delta shown as definitions in administrative and other expenses mainly represents restructuring charges, which are stated in a separate line item in the group income statement.
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Acquisition expenses and commissions1 | (2,494) | (2,451) |
| Definitions | 6 | 8 |
| Scope | (76) | (63) |
| Acquisition costs incurred | (2,564) | (2,506) |
| Capitalization of DAC1 | 858 | 866 |
| Definition: URR capitalized | 277 | 260 |
| Definition: policyholder participation2 | 512 | 495 |
| Scope | 16 | 16 |
| Capitalization of DAC | 1,663 | 1,638 |
| Amortization, unlocking, and true-up of DAC1 | (869) | (814) |
| Definition: URR amortized | (50) | (69) |
| Definition: policyholder participation2 | (600) | (662) |
| Scope | (11) | (16) |
| Amortization, unlocking, and true-up of DAC | (1,531) | (1,561) |
| Commissions and profit received on reinsurance business ceded | 43 | 39 |
| Acquisition costs3 | (2,390) | (2,391) |
| Administrative and other expenses1 | (901) | (898) |
| Definitions | 60 | 74 |
| Scope | (64) | (60) |
| Administrative expenses on reinsurance business ceded | 7 | 8 |
| Administrative expenses3 | (898) | (877) |
| € mn | |
|---|---|
| ------ | -- |
| Six months ended 30 June | 2018 | 2017 |
|---|---|---|
| Acquisition expenses and commissions1 | (2,494) | (2,451) |
| Administrative and other expenses1 | (901) | (898) |
| Capitalization of DAC1 | 858 | 866 |
| Amortization, unlocking, and true-up of DAC1 | (869) | (814) |
| Acquisition and administrative expenses | (3,406) | (3,297) |
| Definitions | 205 | 106 |
| Scope | (136) | (122) |
| Commissions and profit received on reinsurance business ceded | 43 | 39 |
| Administrative expenses on reinsurance business ceded | 7 | 8 |
| Acquisition and administrative expenses (net)2 | (3,288) | (3,267) |
| 1_As per Interim Group Management Report. |
2_As per notes to the condensed consolidated interim financial statements.
1_As per Interim Group Management Report.
2_For German Speaking Countries, policyholder participation on revaluation of DAC/URR capitalization/amortization. 3_As per notes to the condensed consolidated interim financial statements.
Impact of change in DAC includes effects of change in DAC, unearned revenue reserves (URR), and value of business acquired (VO-BA), and is the net impact of the deferral and amortization of acquisition costs and front-end loadings on operating profit.
URR capitalized: Capitalization amount of unearned revenue reserves (URR) and deferred profit liabilities (DPL) for FAS 97 LP.
URR amortized: Total amount of URR amortized includes scheduled URR amortization, true-up, and unlocking.
Both capitalization and amortization are included in the line item premiums earned (net) in the group income statement.
Policyholder participation is included within change in our reserves for insurance and investment contracts (net) in the group income statement.
A _ Interim Group Management Report
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| € mn | |||
|---|---|---|---|
| Note | As of 30 June 2018 |
As of 31 December 2017 |
|
| ASSETS | |||
| Cash and cash equivalents | 17,974 | 17,119 | |
| Financial assets carried at fair value through income | 5 | 7,676 | 8,177 |
| Investments | 6 | 548,225 | 546,828 |
| Loans and advances to banks and customers | 7 | 106,669 | 104,224 |
| Financial assets for unit-linked contracts | 120,402 | 119,141 | |
| Reinsurance assets | 8 | 16,275 | 16,375 |
| Deferred acquisition costs | 9 | 25,926 | 23,184 |
| Deferred tax assets | 1,045 | 931 | |
| Other assets | 10 | 38,889 | 37,731 |
| Non-current assets and assets of disposal groups classified as held for sale | 3 | 250 | 14,329 |
| Intangible assets | 11 | 13,415 | 13,262 |
| Total assets | 896,745 | 901,300 | |
| LIABILITIES AND EQUITY | |||
| Financial liabilities carried at fair value through income1 | 10,762 | 11,291 | |
| Liabilities to banks and customers | 12 | 13,767 | 12,746 |
| Unearned premiums | 25,850 | 21,442 | |
| Reserves for loss and loss adjustment expenses | 13 | 72,918 | 73,292 |
| Reserves for insurance and investment contracts | 14 | 524,338 | 513,687 |
| Financial liabilities for unit-linked contracts | 120,402 | 119,141 | |
| Deferred tax liabilities | 4,213 | 4,906 | |
| Other liabilities | 15 | 39,261 | 39,639 |
| Liabilities of disposal groups classified as held for sale Certificated liabilities |
3 16 |
- 9,205 |
13,662 9,596 |
| Subordinated liabilities | 16 | 13,387 | 13,295 |
| Total liabilities | 834,102 | 832,698 | |
| Shareholders' equity | 60,282 | 65,553 | |
| Non-controlling interests | 2,360 | 3,049 | |
| Total equity | 17 | 62,642 | 68,602 |
| Total liabilities and equity | 896,745 | 901,300 | |
| 1_Include mainly derivative financial instruments. |
| € mn | |||
|---|---|---|---|
| Six months ended 30 June | Note | 2018 | 2017 |
| Gross premiums written | 41,966 | 41,425 | |
| Ceded premiums written | (2,856) | (2,643) | |
| Change in unearned premiums (net) | (3,877) | (3,639) | |
| Premiums earned (net) | 18 | 35,233 | 35,143 |
| Interest and similar income | 19 | 10,827 | 11,099 |
| Income from financial assets and liabilities carried at fair value through income (net) | 20 | (1,109) | (954) |
| Realized gains/losses (net) | 21 | 3,397 | 3,529 |
| Fee and commission income | 22 | 5,727 | 5,591 |
| Other income | 15 | 34 | |
| Total income | 54,090 | 54,441 | |
| Claims and insurance benefits incurred (gross) | (26,411) | (26,579) | |
| Claims and insurance benefits incurred (ceded) | 916 | 1,185 | |
| Claims and insurance benefits incurred (net) | 23 | (25,494) | (25,394) |
| Change in reserves for insurance and investment contracts (net) | 24 | (5,956) | (6,697) |
| Interest expenses | 25 | (514) | (582) |
| Loan loss provisions | 1 | (13) | |
| Impairments of investments (net) | 26 | (943) | (332) |
| Investment expenses | 27 | (630) | (644) |
| Acquisition and administrative expenses (net) | 28 | (12,525) | (12,678) |
| Fee and commission expenses | 29 | (2,204) | (2,172) |
| Amortization of intangible assets | (301) | (79) | |
| Restructuring charges | (158) | (252) | |
| Other expenses | (1) | (1) | |
| Total expenses | (48,724) | (48,844) | |
| Income before income taxes | 5,366 | 5,597 | |
| Income taxes | 30 | (1,340) | (1,585) |
| Net income | 4,025 | 4,013 | |
| Net income attributable to: | |||
| Non-controlling interests | 196 | 203 | |
| Shareholders | 3,830 | 3,810 | |
| Basic earnings per share (€) | 8.86 | 8.45 | |
| Diluted earnings per share (€) | 8.78 | 8.44 | |
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Net income | 4,025 | 4,013 |
| Other comprehensive income | ||
| Items that may be reclassified to profit or loss in future periods | ||
| Foreign currency translation adjustments | ||
| Reclassifications to net income | - | - |
| Changes arising during the period | 71 | (1,182) |
| Subtotal | 71 | (1,182) |
| Available-for-sale investments | ||
| Reclassifications to net income | (446) | (1,635) |
| Changes arising during the period | (2,919) | 927 |
| Subtotal | (3,365) | (708) |
| Cash flow hedges | ||
| Reclassifications to net income | - | (14) |
| Changes arising during the period | (30) | (19) |
| Subtotal | (30) | (34) |
| Share of other comprehensive income of associates and joint ventures | ||
| Reclassifications to net income | - | - |
| Changes arising during the period | (15) | (25) |
| Subtotal | (15) | (25) |
| Miscellaneous | ||
| Reclassifications to net income | - | - |
| Changes arising during the period | (89) | 12 |
| Subtotal | (89) | 12 |
| Items that may never be reclassified to profit or loss | ||
| Changes in actuarial gains and losses on defined benefit plans | 129 | 255 |
| Total other comprehensive income | (3,299) | (1,682) |
| Total comprehensive income | 727 | 2,330 |
| Total comprehensive income attributable to: | ||
| Non-controlling interests | 80 | 176 |
| Shareholders | 647 | 2,154 |
For further details concerning income taxes on components of the other comprehensive income, please see note 30.
€ mn
| Paid-in capital | Retained earnings |
Foreign currency translation adjustments |
Unrealized gains and losses (net) |
Share holders' equity |
Non controlling interests |
Total equity | |
|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2017 | 28,928 | 27,087 | (762) | 11,830 | 67,083 | 3,052 | 70,135 |
| Total comprehensive income1 | - | 4,015 | (1,144) | (717) | 2,154 | 176 | 2,330 |
| Paid-in capital | - | - | - | - | - | - | - |
| Treasury shares | - | (360) | - | - | (360) | - | (360) |
| Transactions between equity holders2 | - | (1,277) | - | 8 | (1,269) | (162) | (1,431) |
| Dividends paid | - | (3,410) | - | - | (3,410) | (202) | (3,612) |
| Balance as of 30 June 2017 | 28,928 | 26,055 | (1,906) | 11,122 | 64,198 | 2,864 | 67,062 |
| Balance as of 1 January 2018 | 28,928 | 27,199 | (2,749) | 12,175 | 65,553 | 3,049 | 68,602 |
| Total comprehensive income1 | - | 3,806 | 74 | (3,233) | 647 | 80 | 727 |
| Paid-in capital | - | - | - | - | - | - | - |
| Treasury shares | - | 4 | - | - | 4 | - | 4 |
| Transactions between equity holders2,3 | - | (2,491) | (19) | 17 | (2,493) | (587) | (3,080) |
| Dividends paid | - | (3,428) | - | - | (3,428) | (182) | (3,610) |
| Balance as of 30 June 2018 | 28,928 | 25,090 | (2,694) | 8,958 | 60,282 | 2,360 | 62,642 |
1_Total comprehensive income in shareholders' equity for the six months ended 30 June 2018 comprises net income attributable to shareholders of € 3,830 mn (2017: € 3,810 mn).
2_Includes income taxes within retained earnings.
3_As announced in November 2017, a share buy-back with a volume of € 2 bn was executed in the period from 3 January until 3 May 2018. During the first half year of 2018, Allianz SE purchased 10.4 million own shares for an amount of € 2.0 bn. All repurchased shares (10,373,863 shares) have been redeemed according to the simplified procedure without reduction of the share capital. The number of issued shares was thereby reduced from 440,249,646 (as of 31 December 2017) to 429,875,783 (effective on 13 June 2018).
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| SUMMARY | ||
| Net cash flow provided by operating activities | 15,030 | 19,615 |
| Net cash flow used in investing activities | (8,567) | (11,565) |
| Net cash flow used in financing activities | (6,145) | (4,941) |
| Effect of exchange rate changes on cash and cash equivalents | 6 | (419) |
| Change in cash and cash equivalents | 324 | 2,691 |
| Cash and cash equivalents at beginning of period | 17,119 | 14,463 |
| Cash and cash equivalents reclassified to assets of disposal groups held for sale and disposed of in 2018 | 531 | - |
| Cash and cash equivalents at end of period | 17,974 | 17,154 |
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Net income | 4,025 | 4,013 |
| Adjustments to reconcile net income to net cash flow provided by operating activities | ||
| Share of earnings from investments in associates and joint ventures | (170) | (220) |
| Realized gains/losses (net) and impairments of investments (net) of: | ||
| Available-for-sale and held-to-maturity investments, investments in associates and joint ventures, real estate held for investment, loans and advances to banks and | ||
| customers, non-current assets and disposal groups classified as held for sale | (2,454) | (3,229) |
| Other investments, mainly financial assets held for trading and designated at fair value through income | 2,293 | (1,311) |
| Depreciation and amortization | 710 | 718 |
| Loan loss provisions | (1) | 13 |
| Interest credited to policyholder accounts | 2,083 | 2,328 |
| Net change in: | ||
| Financial assets and liabilities held for trading | (1,803) | 2,085 |
| Reverse repurchase agreements and collateral paid for securities borrowing transactions | (820) | 87 |
| Repurchase agreements and collateral received from securities lending transactions | 45 | 631 |
| Reinsurance assets | 239 | (654) |
| Deferred acquisition costs | (339) | (405) |
| Unearned premiums | 4,534 | 3,921 |
| Reserves for loss and loss adjustment expenses | (282) | 649 |
| Reserves for insurance and investment contracts | 8,674 | 7,316 |
| Deferred tax assets/liabilities | 154 | 262 |
| Other (net) | (1,858) | 3,409 |
| Subtotal | 11,005 | 15,602 |
| Net cash flow provided by operating activities | 15,030 | 19,615 |
| CASH FLOW FROM INVESTING ACTIVITIES | ||
| Proceeds from the sale, maturity or repayment of: | ||
| Financial assets designated at fair value through income | 1,763 | 1,051 |
| Available-for-sale investments | 84,685 | 82,146 |
| Held-to-maturity investments | 206 | 136 |
| Investments in associates and joint ventures | 453 | 381 |
| Non-current assets and disposal groups classified as held for sale | 59 | 215 |
| Real estate held for investment | 46 | 85 |
| Fixed assets of renewable energy investments | - | 2 |
| Loans and advances to banks and customers (purchased loans) | 2,460 | 3,023 |
| Property and equipment | 188 | 128 |
| Subtotal | 89,859 | 87,167 |
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Payments for the purchase or origination of: | ||
| Financial assets designated at fair value through income | (1,901) | (915) |
| Available-for-sale investments | (89,230) | (92,224) |
| Held-to-maturity investments | (252) | (140) |
| Investments in associates and joint ventures | (1,893) | (1,229) |
| Non-current assets and disposal groups classified as held for sale | - | (50) |
| Real estate held for investment | (221) | (75) |
| Fixed assets of renewable energy investments | (113) | (150) |
| Loans and advances to banks and customers (purchased loans) | (596) | (1,407) |
| Property and equipment | (623) | (701) |
| Subtotal | (94,830) | (96,890) |
| Business combinations (note 3): | ||
| Proceeds from sale of subsidiaries, net of cash disposed | (208) | - |
| Acquisitions of subsidiaries, net of cash acquired | - | - |
| Change in other loans and advances to banks and customers (originated loans) | (3,084) | (1,729) |
| Other (net) | (304) | (112) |
| Net cash flow used in investing activities | (8,567) | (11,565) |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Net change in liabilities to banks and customers | 951 | 289 |
| Proceeds from the issuance of certificated liabilities and subordinated liabilities | 2,250 | 3,786 |
| Repayments of certificated liabilities and subordinated liabilities | (2,666) | (3,468) |
| Cash inflow from capital increases | - | - |
| Transactions between equity holders | (3,043) | (1,431) |
| Dividends paid to shareholders | (3,610) | (3,612) |
| Net cash from sale or purchase of treasury shares | 10 | (355) |
| Other (net) | (37) | (150) |
| Net cash flow used in financing activities | (6,145) | (4,941) |
| SUPPLEMENTARY INFORMATION ON THE CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Income taxes paid | (824) | (1,301)1 |
| Dividends received | 1,472 | 1,266 |
| Interest received | 9,257 | 10,048 |
| Interest paid | (350) | (553) |
| 1_Prior year figure has been adjusted. |
€ mn
| Liabilities to banks and customers |
Certificated and subordinated liabilities |
Total | |
|---|---|---|---|
| As of 31 December 2017 | 8,925 | 22,891 | 31,817 |
| Net cash flows | 951 | (416) | 535 |
| Non-cash transactions | |||
| Changes in the consolidated subsidiaries of the Allianz Group |
(2) | - | (2) |
| Foreign currency translation adjustments | (40) | 6 | (34) |
| Fair value and other changes | 2 | 111 | 113 |
| As of 30 June 2018 | 9,836 | 22,592 | 32,428 |
The Allianz Group's condensed consolidated interim financial statements are presented in accordance with the requirements of IAS 34 and have been prepared in conformity with International Financial Reporting Standards (IFRSs), as adopted under European Union regulations.
For existing and unchanged IFRSs, the condensed consolidated interim financial statements use the same accounting policies for recognition, measurement, consolidation and presentation as applied in the consolidated financial statements for the year ended 31 December 2017. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2017.
In accordance with the provisions of IFRS 4, insurance contracts are recognized and measured on the basis of accounting principles generally accepted in the United States of America (US GAAP) as at first-time adoption of IFRS 4 on 1 January 2005.
Amounts are rounded to millions of Euro (€ mn), unless otherwise stated.
These condensed consolidated interim financial statements of the Allianz Group were authorized for issue by the Board of Management on 2 August 2018.
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers. IFRS 15 supersedes IAS 18, IAS 11, and a number of revenue-related interpretations. The Group adopted IFRS 15 using the cumulative effect method on the required effective date. As a result, the Allianz Group did not apply the requirements of IFRS 15 to the comparative period presented.
Under IFRS 15, revenue is recognized when (or as) the Allianz Group satisfies a performance obligation by transferring a service to a customer. Furthermore, revenue is recognized for these contracts to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur. The guidance also changes the accounting for certain contract costs and revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements.
Based on the Allianz Group's detailed assessment, only a few differences in presentation and timing of revenue recognition were identified. The impacts Allianz Group identified primarily relate to principal versus agent considerations (i.e. gross-up) and the accounting treatment of certain asset management related upfront distribution costs which under IFRS 15 can no longer be capitalized.
The adoption of IFRS 15 led to an increase of fee and commission income and fee and commission expenses of € 193 mn (i.e. grossup effect) and a decrease of retained earnings as of 1 January 2018 by € 20 mn, due to the reversal of capitalized upfront distribution costs. Other than that, the adoption of IFRS 15 had no impact on the Allianz Group's financial position and the financial results.
The following amendments and revisions to existing standards became effective for the Allianz Group's consolidated financial statements as of 1 January 2018:
These changes had no material impact on the Allianz Group's financial results or financial position.
On 27 April 2018, the Allianz Group successfully completed the acquisition of Euler Hermes's outstanding shares and delisted Euler Hermes' shares from Euronext Paris on the very same day.
From January through April 2018, the Allianz Group acquired the remaining 20.9% of Euler Hermes's outstanding shares in consideration for a total of € 1,073 mn in cash, equivalent to € 122 per share. The buyout of the outstanding shares reduced the shareholders' equity of the Allianz Group of € 513 mn.
Non-current assets and disposal groups classified as held for sale € mn
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Assets of disposal groups classified as held for sale | ||
| Oldenburgische Landesbank AG, Oldenburg | - | 14,102 |
| Other disposal groups | - | 6 |
| Subtotal | - | 14,108 |
| Non-current assets classified as held for sale | ||
| Real estate held for investment | 250 | 216 |
| Real estate held for own use | - | 4 |
| Subtotal | 250 | 220 |
| Total | 250 | 14,329 |
| Liabilities of disposal groups classified as held for sale | ||
| Oldenburgische Landesbank AG, Oldenburg | - | 13,657 |
| Other disposal groups | - | 6 |
| Total | - | 13,662 |
In the first half of 2018, the Allianz Group disposed of Oldenburgische Landesbank AG, Oldenburg, a 90.2% owned subsidiary of the Allianz Group, allocated to the reportable segment Banking (Corporate and Other). The entity had been classified as held for sale since year-end 2016. It was deconsolidated on 7 February 2018. At 31 December 2017 already, an impairment and a liability of € 233 mn had been recognized in connection with the expected loss from the sale of Oldenburgische Landesbank AG. In the first half of 2018, the Allianz Group received proceeds from the sale of its 90.2% stake of € 323 mn and recognized a deconsolidation loss of € 24 mn.
The impact of the disposal, net of cash disposed, on the consolidated statement of cash flows for the first half of 2018 was as follows:
€ mn
| Financial assets carried at fair value through income | 20 |
|---|---|
| Investments | 2,492 |
| Loans and advances to banks and customers | 11,092 |
| Deferred tax assets | 51 |
| Other assets | 156 |
| Financial liabilities carried at fair value through income | (15) |
| Liabilities to banks and customers | (12,756) |
| Other liabilities | (578) |
| Certificated liabilities | (133) |
| Subordinated liabilities | (149) |
| Other comprehensive income | (45) |
| Impairment loss on measurement of disposal group at fair value less costs to sell | (49) |
| Impairment in connection with expected loss | (233) |
| Realized loss from the disposal | (24) |
| Non-controlling interests | (37) |
| Proceeds from sale of the subsidiary, net of cash disposed1 | (208) |
| 1_Includes cash and cash equivalents at an amount of € 531 mn which were disposed of with the entity. |
The business activities of the Allianz Group, the business segments as well as the products and services from which the reportable segments derive their revenues are consistent with those described in the consolidated financial statements for the year ended 31 December 2017. The statement contained therein regarding general segment reporting information is still applicable and valid. The reportable segments measure of profit or loss remained unchanged.
Effective 1 January 2018 and 1 April 2018, the Allianz Group reorganized the structure of its insurance activities to reflect the changes in the responsibilities of the Board of Management. Middle East and Africa were reallocated to the reportable segment Global Insurance Lines & Anglo Markets, Middle East and Africa. In the business segment Property-Casualty, the reportable segment Iberia & Latin America was combined with the reportable segment Allianz Partners to form the reportable segment Iberia & Latin America and Allianz Partners. Previously reported information has been adjusted to reflect this change in the composition of the Allianz Group's reportable segments.
Additionally, some minor reallocations between the reportable segments have been made.
Business segment information – consolidated balance sheets
| € mn | |
|---|---|
| As of 30 June 2018 |
As of | As of | |
|---|---|---|---|
| 31 December 2017 | 30 June 2018 | As of 31 December 2017 |
|
| 3,931 | 3,317 | 8,505 | 9,025 |
| 736 | 604 | 6,641 | 7,442 |
| 101,105 | 101,668 | 430,543 | 424,294 |
| 10,738 | 10,610 | 95,020 | 92,674 |
| - | - | 120,402 | 119,141 |
| 11,108 | 11,437 | 5,273 | 5,034 |
| 5,070 | 4,715 | 20,856 | 18,469 |
| 883 | 891 | 746 | 685 |
| 22,453 | 22,787 | 17,341 | 19,416 |
| 57 | 23 | 192 | 204 |
| 3,101 | 2,985 | 2,883 | 2,934 |
| 159,182 | 159,036 | 708,403 | 699,318 |
| Property-Casualty | Life/Health | |||
|---|---|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
|
| LIABILITIES AND EQUITY | ||||
| Financial liabilities carried at fair value through income | 160 | 133 | 10,510 | 11,021 |
| Liabilities to banks and customers | 1,684 | 1,237 | 5,454 | 5,655 |
| Unearned premiums | 21,099 | 17,065 | 4,780 | 4,402 |
| Reserves for loss and loss adjustment expenses | 61,683 | 62,093 | 11,303 | 11,256 |
| Reserves for insurance and investment contracts | 14,796 | 14,928 | 509,815 | 499,060 |
| Financial liabilities for unit-linked contracts | - | - | 120,402 | 119,141 |
| Deferred tax liabilities | 2,215 | 2,445 | 3,514 | 3,956 |
| Other liabilities | 16,250 | 18,876 | 13,670 | 14,600 |
| Liabilities of disposal groups classified as held for sale | - | 6 | - | - |
| Certificated liabilities | - | 11 | 12 | 11 |
| Subordinated liabilities | - | - | 65 | 65 |
| Total liabilities | 117,888 | 116,794 | 679,525 | 669,168 |
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
| 939 | 1,050 | 5,131 | 3,919 | (532) | (192) | 17,974 | 17,119 |
| 67 | 72 | 594 | 492 | (362) | (434) | 7,676 | 8,177 |
| 36 | 24 | 102,474 | 105,441 | (85,934) | (84,599) | 548,225 | 546,828 |
| 64 | 59 | 5,208 | 5,368 | (4,361) | (4,488) | 106,669 | 104,224 |
| - | - | - | - | - | - | 120,402 | 119,141 |
| - | - | - | - | (106) | (96) | 16,275 | 16,375 |
| - | - | - | - | - | - | 25,926 | 23,184 |
| 176 | 148 | 1,002 | 958 | (1,762) | (1,752) | 1,045 | 931 |
| 3,742 | 3,215 | 6,238 | 8,871 | (10,885) | (16,558) | 38,889 | 37,731 |
| - | - | - | 14,105 | - | (3) | 250 | 14,329 |
| 7,421 | 7,332 | 9 | 12 | - | - | 13,415 | 13,262 |
| 12,445 | 11,901 | 120,656 | 139,165 | (103,942) | (108,120) | 896,745 | 901,300 |
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
As of 30 June 2018 |
As of 31 December 2017 |
| - | - | 458 | 577 | (367) | (440) | 10,762 | 11,291 |
| 174 | 174 | 8,261 | 7,208 | (1,806) | (1,527) | 13,767 | 12,746 |
| - | - | - | - | (29) | (26) | 25,850 | 21,442 |
| - | - | - | - | (68) | (57) | 72,918 | 73,292 |
| - | - | (87) | (109) | (187) | (193) | 524,338 | 513,687 |
| - | - | - | - | - | - | 120,402 | 119,141 |
| 66 | 79 | 179 | 178 | (1,762) | (1,752) | 4,213 | 4,906 |
| 3,229 | 2,936 | 24,434 | 26,242 | (18,323) | (23,015) | 39,261 | 39,639 |
| - | - | - | 13,682 | - | (25) | - | 13,662 |
| - | - | 11,977 | 12,367 | (2,783) | (2,794) | 9,205 | 9,596 |
| - | - | 13,342 | 13,250 | (20) | (20) | 13,387 | 13,295 |
| 3,469 | 3,188 | 58,564 | 73,396 | (25,344) | (29,848) | 834,102 | 832,698 |
| Total equity | 62,642 | 68,602 | |||||
| Total liabilities and equity | 896,745 | 901,300 | |||||
Business segment information – total revenues and reconciliation of operating profit (loss) to net income (loss) € mn
| Property-Casualty | Life/Health | ||||
|---|---|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | 2018 | 2017 | |
| Total revenues1 | 29,984 | 29,388 | 34,229 | 33,619 | |
| Premiums earned (net) | 23,742 | 23,557 | 11,491 | 11,585 | |
| Operating investment result | |||||
| Interest and similar income | 1,717 | 1,760 | 8,927 | 9,056 | |
| Operating income from financial assets and liabilities carried at fair value through income (net) | (19) | (51) | (1,127) | (965) | |
| Operating realized gains/losses (net) | 92 | 152 | 2,652 | 2,916 | |
| Interest expenses, excluding interest expenses from external debt | (46) | (52) | (50) | (49) | |
| Operating impairments of investments (net) | (28) | (6) | (743) | (255) | |
| Investment expenses | (183) | (183) | (650) | (609) | |
| Subtotal | 1,533 | 1,621 | 9,010 | 10,094 | |
| Fee and commission income | 868 | 911 | 767 | 708 | |
| Other income | 1 | 32 | 12 | 1 | |
| Claims and insurance benefits incurred (net) | (15,759) | (15,556) | (9,738) | (9,838) | |
| Operating change in reserves for insurance and investment contracts (net)2 | (193) | (258) | (5,730) | (6,476) | |
| Loan loss provisions | - | - | - | - | |
| Acquisition and administrative expenses (net), excluding acquisition-related expenses | (6,657) | (6,739) | (3,288) | (3,267) | |
| Fee and commission expenses | (806) | (864) | (369) | (350) | |
| Operating amortization of intangible assets | - | - | (9) | (9) | |
| Operating restructuring charges | - | - | - | (17) | |
| Other expenses | (1) | - | (1) | (148) | |
| Operating profit (loss) | 2,729 | 2,705 | 2,144 | 2,282 | |
| Non-operating investment result | |||||
| Non-operating income from financial assets and liabilities carried at fair value through income (net) | 27 | (2) | 1 | 22 | |
| Non-operating realized gains/losses (net) | 444 | 307 | 22 | 59 | |
| Non-operating impairments of investments (net) | (144) | (53) | (15) | (27) | |
| Subtotal | 327 | 252 | 7 | 54 | |
| Non-operating change in reserves for insurance and investment contracts (net) | - | - | 2 | 2 | |
| Interest expenses from external debt | - | - | - | - | |
| Acquisition-related expenses | - | - | - | - | |
| Non-operating amortization of intangible assets | (29) | (31) | (251)3 | (27) | |
| Non-operating restructuring charges | (50) | (165) | (32) | (7) | |
| Non-operating items | 247 | 56 | (273) | 22 | |
| Income (loss) before income taxes | 2,976 | 2,761 | 1,872 | 2,305 | |
| Income taxes | (732) | (691) | (550) | (693) | |
| Net income (loss) | 2,244 | 2,070 | 1,322 | 1,611 | |
| Net income (loss) attributable to: | |||||
| Non-controlling interests | 44 | 90 | 89 | 67 | |
| Shareholders | 2,200 | 1,980 | 1,233 | 1,544 | |
1_Total revenues comprise statutory gross premiums written in Property-Casualty and Life/Health, operating revenues in Asset Management and total revenues in Corporate and Other (Banking).
2_For the six months ended 30 June 2018, includes expenses for premium refunds (net) in Property-Casualty of € (51) mn (2017: € (131) mn).
3_Includes € 0.2 bn loss from the sale of the traditional life insurance portfolio in Taiwan.
| Asset Management | Corporate and Other | Consolidation | Group | ||||
|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| 3,257 | 3,114 | 147 | 275 | (267) | (178) | 67,350 | 66,218 |
| - | - | - | - | - | - | 35,233 | 35,143 |
| 6 | 12 | 281 | 383 | (104) | (112) | 10,827 | 11,099 |
| 5 | 31 | (8) | 10 | 4 | (1) | (1,145) | (976) |
| - | - | - | - | 41 | (42) | 2,785 | 3,026 |
| (5) | (5) | (100) | (163) | 103 | 107 | (98) | (161) |
| - | - | - | - | - | - | (770) | (261) |
| - | - | (45) | (49) | 247 | 197 | (630) | (644) |
| 5 | 38 | 129 | 181 | 291 | 148 | 10,969 | 12,083 |
| 4,200 | 3,845 | 1,043 | 1,138 | (1,150) | (1,012) | 5,727 | 5,591 |
| 2 | - | 4 | 149 | (5) | (148) | 15 | 34 |
| - | - | - | - | 2 | - | (25,494) | (25,394) |
| - | - | - | - | (35) | 35 | (5,958) | (6,699) |
| - | - | 1 | (13) | - | - | 1 | (13) |
| (2,010) | (1,958) | (552) | (692) | (18) | (27) | (12,525) | (12,684) |
| (951) | (769) | (1,003) | (1,027) | 925 | 838 | (2,204) | (2,172) |
| - | - | - | - | - | - | (9) | (9) |
| - | - | - | - | - | - | - | (17) |
| - | - | - | - | - | 148 | (1) | (1) |
| 1,247 | 1,156 | (378) | (265) | 12 | (18) | 5,753 | 5,860 |
| - | - | 14 | (29) | (4) | 31 | 36 | 22 |
| - | 7 | 147 | 71 | (2) | 59 | 612 | 504 |
| - | - | (12) | 9 | - | - | (172) | (71) |
| - | 7 | 148 | 51 | (6) | 91 | 476 | 454 |
| - | - | - | - | - | - | 2 | 2 |
| - | - | (416) | (421) | - | - | (416) | (421) |
| - | 6 | - | - | - | - | - | 6 |
| (7) | (7) | (5) | (5) | - | - | (291) | (69) |
| 1 | (8) | (77) | (56) | - | - | (158) | (235) |
| (6) | (2) | (350) | (430) | (6) | 91 | (388) | (263) |
| 1,241 | 1,154 | (728) | (695) | 5 | 73 | 5,366 | 5,597 |
| (307) | (419) | 247 | 239 | 1 | (21) | (1,340) | (1,585) |
| 934 | 735 | (481) | (456) | 7 | 52 | 4,025 | 4,013 |
| 38 | 35 | 25 | 11 | - | - | 196 | 203 |
| 896 | 700 | (506) | (467) | 7 | 52 | 3,830 | 3,810 |
Reconciliation of reportable segments to Allianz Group figures € mn
| Total revenues | Premiums earned (net) | Operating profit (loss) | Net income (loss) | |||||
|---|---|---|---|---|---|---|---|---|
| Six months ended 30 June | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| German Speaking Countries and Central & Eastern Europe | 9,506 | 9,228 | 6,365 | 6,172 | 621 | 790 | 549 | 664 |
| Western & Southern Europe and Asia Pacific | 6,587 | 6,548 | 5,412 | 5,667 | 855 | 905 | 693 | 651 |
| Iberia & Latin America and Allianz Partners | 5,323 | 5,364 | 3,995 | 3,959 | 275 | 242 | 165 | 111 |
| Global Insurance Lines & Anglo Markets, Middle East and Africa |
12,920 | 12,211 | 7,970 | 7,760 | 994 | 769 | 851 | 644 |
| Consolidation | (4,354) | (3,964) | - | - | (16) | - | (13) | - |
| Total Property-Casualty | 29,984 | 29,388 | 23,742 | 23,557 | 2,729 | 2,705 | 2,244 | 2,070 |
| German Speaking Countries and Central & Eastern Europe | 14,322 | 13,619 | 6,976 | 7,132 | 857 | 826 | 579 | 555 |
| Western & Southern Europe and Asia Pacific | 14,483 | 14,182 | 3,502 | 3,400 | 712 | 672 | 303 | 491 |
| Iberia & Latin America | 987 | 1,008 | 227 | 242 | 160 | 164 | 111 | 128 |
| USA | 4,627 | 5,068 | 576 | 609 | 388 | 587 | 312 | 410 |
| Global Insurance Lines & Anglo Markets, Middle East and Africa |
336 | 325 | 208 | 201 | 28 | 24 | 18 | 18 |
| Consolidation and Other | (527) | (584) | 2 | 1 | (1) | 9 | (1) | 9 |
| Total Life/Health | 34,229 | 33,619 | 11,491 | 11,585 | 2,144 | 2,282 | 1,322 | 1,611 |
| Asset Management | 3,257 | 3,114 | - | - | 1,247 | 1,156 | 934 | 735 |
| Holding & Treasury | - | - | - | - | (442) | (343) | (506) | (508) |
| Banking | 147 | 275 | - | - | 29 | 57 | (5) | 38 |
| Alternative Investments | - | - | - | - | 35 | 20 | 29 | 14 |
| Consolidation | - | - | - | - | - | - | - | - |
| Total Corporate and Other | 147 | 275 | - | - | (378) | (265) | (481) | (456) |
| Consolidation | (267) | (178) | - | - | 12 | (18) | 7 | 52 |
| Group | 67,350 | 66,218 | 35,233 | 35,143 | 5,753 | 5,860 | 4,025 | 4,013 |
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Financial assets held for trading | ||
| Debt securities | 424 | 405 |
| Equity securities | 219 | 210 |
| Derivative financial instruments | 2,701 | 2,461 |
| Subtotal | 3,343 | 3,076 |
| Financial assets designated at fair value through income | ||
| Debt securities | 2,312 | 2,603 |
| Equity securities | 2,020 | 2,498 |
| Subtotal | 4,333 | 5,101 |
| Total | 7,676 | 8,177 |
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Available-for-sale investments | 519,795 | 520,397 |
| Held-to-maturity investments | 2,720 | 2,678 |
| Funds held by others under reinsurance contracts assumed | 847 | 836 |
| Investments in associates and joint ventures | 10,774 | 9,010 |
| Real estate held for investment | 11,551 | 11,419 |
| Fixed assets of renewable energy investments | 2,538 | 2,488 |
| Total | 548,225 | 546,828 |
| € mn | |
|---|---|
€ mn
| As of 30 June 2018 | As of 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Amortized cost | Unrealized gains |
Unrealized losses |
Fair value | Amortized cost | Unrealized gains |
Unrealized losses |
Fair value | |
| Debt securities | ||||||||
| Corporate bonds | 230,658 | 10,623 | (2,598) | 238,684 | 228,439 | 15,579 | (493) | 243,526 |
| Government and government agency bonds1 | 179,568 | 21,163 | (1,531) | 199,200 | 177,186 | 22,551 | (827) | 198,911 |
| MBS/ABS | 22,756 | 220 | (463) | 22,514 | 21,405 | 368 | (140) | 21,633 |
| Other | 4,893 | 926 | (13) | 5,807 | 4,472 | 715 | (18) | 5,169 |
| Subtotal | 437,876 | 32,933 | (4,605) | 466,204 | 431,503 | 39,213 | (1,477) | 469,239 |
| Equity securities | 40,938 | 13,120 | (468) | 53,590 | 37,195 | 14,241 | (278) | 51,158 |
| Total | 478,815 | 46,053 | (5,073) | 519,795 | 468,697 | 53,455 | (1,755) | 520,397 |
1_As of 30 June 2018, fair value and amortized costs of bonds from countries with a rating below AA amounted to € 73,955 mn (31 December 2017: € 74,132 mn) and € 70,682 mn (31 December 2017: € 68,638 mn), respectively.
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Short-term investments and certificates of deposit | 2,972 | 3,094 |
| Loans | 101,300 | 99,526 |
| Other | 2,484 | 1,697 |
| Subtotal | 106,756 | 104,317 |
| Loan loss allowance | (87) | (94) |
| Total | 106,669 | 104,224 |
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Unearned premiums | 2,015 | 1,504 |
| Reserves for loss and loss adjustment expenses | 9,360 | 10,112 |
| Aggregate policy reserves | 4,768 | 4,633 |
| Other insurance reserves | 132 | 127 |
| Total | 16,275 | 16,375 |
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Deferred acquisition costs | ||
| Property-Casualty | 5,070 | 4,715 |
| Life/Health | 19,767 | 17,568 |
| Subtotal | 24,837 | 22,283 |
| Deferred sales inducements | 681 | 450 |
| Present value of future profits | 408 | 451 |
| Total | 25,926 | 23,184 |
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Receivables | ||
| Policyholders | 6,500 | 6,134 |
| Agents | 4,663 | 4,231 |
| Reinsurance | 3,347 | 2,594 |
| Other | 5,322 | 4,904 |
| Less allowances for doubtful accounts | (580) | (594) |
| Subtotal | 19,252 | 17,270 |
| Tax receivables | ||
| Income taxes | 1,735 | 2,032 |
| Other taxes | 1,731 | 1,742 |
| Subtotal | 3,466 | 3,775 |
| Accrued dividends, interest and rent | 6,031 | 6,671 |
| Prepaid expenses | 605 | 442 |
| Derivative financial instruments used for hedging, that meet the criteria for hedge accounting, and firm commitments |
438 | 538 |
| Property and equipment | ||
| Real estate held for own use | 2,840 | 2,941 |
| Software | 2,817 | 2,786 |
| Equipment | 1,424 | 1,432 |
| Subtotal | 7,082 | 7,159 |
| Other assets | 2,015 | 1,876 |
| Total | 38,889 | 37,731 |
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Goodwill | 12,054 | 11,848 |
| Distribution agreements1 | 874 | 918 |
| Other2 | 488 | 496 |
| Total | 13,415 | 13,262 |
1_Primarily includes the long-term distribution agreements with Commerzbank AG of € 205 mn (2017: € 223 mn), Banco Popular S.A. of € 342 mn (2017: € 352 mn), Yapi ve Kredi Bankasi A.S. of € 58 mn (2017: € 71 mn), Philippine National Bank of € 62 mn (2017: € 67 mn) and HSBC Asia, HSBC Turkey, BTPN Indonesia, and Maybank Indonesia of € 100 mn (2017: € 110 mn).
2_Primarily include acquired business portfolios, customer relationships, heritable building rights, land use rights, lease rights, and brand names.
€ mn
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Payable on demand and other deposits | 1,061 | 973 |
| Repurchase agreements and collateral received from securities lending transactions and derivatives |
3,932 | 3,821 |
| Other | 8,774 | 7,953 |
| Total | 13,767 | 12,746 |
As of 30 June 2018, the reserves for loss and loss adjustment expenses of the Allianz Group totaled € 72,918 mn (31 December 2017: € 73,292 mn). The following table reconciles the beginning and ending reserves of the Property-Casualty business segment for the halfyears ended 30 June 2018 and 2017.
| 2018 | 2017 | |
|---|---|---|
| As of 1 January | 62,093 | 61,617 |
| Balance carry forward of discounted loss reserves | 4,096 | 4,055 |
| Subtotal | 66,189 | 65,671 |
| Loss and loss adjustment expenses incurred | ||
| Current year | 17,740 | 17,547 |
| Prior years | (1,312) | (1,016) |
| Subtotal | 16,427 | 16,531 |
| Loss and loss adjustment expenses paid | ||
| Current year | (6,383) | (6,341) |
| Prior years | (10,796) | (9,804) |
| Subtotal | (17,178) | (16,145) |
| Foreign currency translation adjustments and other changes | 60 | (1,184) |
| Changes in the consolidated subsidiaries of the Allianz Group | 284 | - |
| Subtotal | 65,782 | 64,873 |
| Ending balance of discounted loss reserves | (4,099) | (4,041) |
| As of 30 June | 61,683 | 60,832 |
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Aggregate policy reserves | 455,159 | 440,926 |
| Reserves for premium refunds | 68,433 | 71,776 |
| Other insurance reserves | 746 | 984 |
| Total | 524,338 | 513,687 |
€ mn
| € mn | ||
|---|---|---|
| As of | As of | |
| 30 June 2018 |
31 December 2017 |
|
| Payables | ||
| Policyholders | 3,842 | 4,626 |
| Reinsurance | 2,199 | 1,589 |
| Agents | 1,505 | 1,562 |
| Subtotal | 7,547 | 7,777 |
| Payables for social security | 390 | 429 |
| Tax payables | ||
| Income taxes | 2,019 | 2,006 |
| Other taxes | 1,696 | 1,453 |
| Subtotal | 3,716 | 3,458 |
| Accrued interest and rent | 625 | 461 |
| Unearned income | 517 | 469 |
| Provisions | ||
| Pensions and similar obligations | 9,297 | 9,410 |
| Employee related | 2,537 | 2,540 |
| Share-based compensation plans | 338 | 497 |
| Restructuring plans | 317 | 313 |
| Other provisions | 1,840 | 2,055 |
| Subtotal | 14,329 | 14,815 |
| Deposits retained for reinsurance ceded | 1,912 | 2,025 |
| Derivative financial instruments used for hedging, that meet the criteria for hedge accounting, and firm commitments |
280 | 147 |
| Financial liabilities for puttable equity instruments | 1,845 | 2,640 |
| Other liabilities | 8,102 | 7,418 |
| Total | 39,261 | 39,639 |
€ mn
€ mn
| As of 30 June 2018 |
As of 31 December 2017 |
|
|---|---|---|
| Senior bonds1 | 8,045 | 8,538 |
| Money market securities | 1,160 | 1,058 |
| Total certificated liabilities | 9,205 | 9,596 |
| Subordinated bonds | 13,342 | 13,250 |
| Hybrid equity2 | 45 | 45 |
| Total subordinated liabilities | 13,387 | 13,295 |
1_Change due to the redemption of a € 0.5 bn bond in the first half-year of 2018.
2_Relates to hybrid equity issued by subsidiaries.
| ISIN | Year of issue | Currency | Notional amount | Coupon in % | Maturity date | |
|---|---|---|---|---|---|---|
| Certificated liabilities | ||||||
| Allianz Finance II B.V., Amsterdam | DE000A1AKHB8 | 2009 | EUR | 1,500 | 4.750 | 22 July 2019 |
| DE000A180B72 | 2016 | EUR | 750 | 0.000 | 21 April 2020 | |
| DE000A19S4T0 | 2017 | EUR | 500 | 3-months Euribor + 50 bps |
7 December 2020 | |
| DE000A1G0RU9 | 2012 | EUR | 1,500 | 3.500 | 14 February 2022 | |
| DE000A19S4U8 | 2017 | EUR | 750 | 0.250 | 6 June 2023 | |
| DE000A19S4V6 | 2017 | EUR | 750 | 0.875 | 6 December 2027 | |
| DE000A1HG1K6 | 2013 | EUR | 750 | 3.000 | 13 March 2028 | |
| DE000A180B80 | 2016 | EUR | 750 | 1.375 | 21 April 2031 | |
| DE000A1HG1L4 | 2013 | GBP | 750 | 4.500 | 13 March 2043 | |
| Subordinated liabilities | ||||||
| Allianz SE, Munich | DE000A1RE1Q3 | 2012 | EUR | 1,500 | 5.625 | 17 October 2042 |
| DE000A14J9N8 | 2015 | EUR | 1,500 | 2.241 | 7 July 2045 | |
| DE000A2DAHN6 | 2017 | EUR | 1,000 | 3.099 | 6 July 2047 | |
| XS1556937891 | 2017 | USD | 600 | 5.100 | 30 January 2049 | |
| XS0857872500 | 2012 | USD | 1,000 | 5.500 | Perpetual bond | |
| DE000A1YCQ29 | 2013 | EUR | 1,500 | 4.750 | Perpetual bond | |
| CH0234833371 | 2014 | CHF | 500 | 3.250 | Perpetual bond | |
| DE000A13R7Z7 | 2014 | EUR | 1,500 | 3.375 | Perpetual bond | |
| XS1485742438 | 2016 | USD | 1,500 | 3.875 | Perpetual bond | |
| Allianz Finance II B.V., Amsterdam | DE000A1GNAH1 | 2011 | EUR | 2,000 | 5.750 | 8 July 2041 |
| DE000A0GNPZ3 | 2006 | EUR | 800 | 5.375 | Perpetual bond |
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Shareholders' equity | ||
| Issued capital | 1,170 | 1,170 |
| Additional paid-in capital | 27,758 | 27,758 |
| Retained earnings1,2 | 25,090 | 27,199 |
| Foreign currency translation adjustments | (2,694) | (2,749) |
| Unrealized gains and losses (net)3 | 8,958 | 12,175 |
| Subtotal | 60,282 | 65,553 |
| Non-controlling interests | 2,360 | 3,049 |
| Total | 62,642 | 68,602 |
1_As of 30 June 2018, include € (112) mn (31 December 2017: € (115) mn) related to treasury shares.
2_As announced in November 2017, a share buy-back with a volume of € 2 bn was executed in the period from 3 January until 3 May 2018. During the first half year of 2018, Allianz SE purchased 10.4 million own shares for an amount of € 2.0 bn. All repurchased shares (10,373,863 shares) have been redeemed according to the simplified procedure without reduction of the share capital. The number of issued shares was thereby reduced from 440,249,646 (as of 31 December 2017) to 429,875,783 (effective on 13 June 2018).
3_As of 30 June 2018, include € 244 mn (31 December 2017: € 274 mn) related to cash flow hedges.
In the second quarter of 2018, a total dividend of € 3,428 mn (2017: € 3,410 mn) or € 8.00 (2017: € 7.60) per qualifying share was paid to the shareholders.
| Premiums earned (net) € mn |
||||
|---|---|---|---|---|
| Six months ended 30 June |
Property Casualty |
Life/Health | Consolidation | Group |
| 2018 | ||||
| Premiums written | ||||
| Gross | 29,984 | 12,052 | (69) | 41,966 |
| Ceded | (2,651) | (274) | 69 | (2,856) |
| Net | 27,332 | 11,778 | - | 39,110 |
| Change in unearned premiums (net) |
(3,590) | (287) | - | (3,877) |
| Premiums earned (net) | 23,742 | 11,491 | - | 35,233 |
| 2017 | ||||
| Premiums written | ||||
| Gross | 29,388 | 12,118 | (81) | 41,425 |
| Ceded | (2,424) | (300) | 81 | (2,643) |
| Net | 26,964 | 11,818 | - | 38,782 |
| Change in unearned premiums (net) |
(3,406) | (232) | - | (3,639) |
| Premiums earned (net) | 23,557 | 11,585 | - | 35,143 |
€ mn
| Six months ended 30 June | 2018 | 2017 |
|---|---|---|
| Dividends from available-for-sale investments | 1,476 | 1,227 |
| Interest from available-for-sale investments | 6,476 | 6,731 |
| Interest from loans to banks and customers | 1,917 | 2,131 |
| Rent from real estate held for investment | 445 | 459 |
| Other | 513 | 550 |
| Total | 10,827 | 11,099 |
| Foreign currency gains and losses (net)1 | 780 | (2,322) |
|---|---|---|
| Income from financial liabilities for puttable equity instruments (net) |
77 | (85) |
| Income from financial assets and liabilities designated at fair value through income (net) |
(110) | 180 |
| Income from financial assets and liabilities held for trading (net) |
(1,856) | 1,272 |
| Six months ended 30 June | 2018 | 2017 |
1_These foreign currency gains and losses arise subsequent to initial recognition on all assets and liabilities denominated in a foreign currency that are monetary items and not measured at fair value through income.
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| REALIZED GAINS | ||
| Available-for-sale investments | ||
| Equity securities | 1,967 | 1,379 |
| Debt securities | 1,741 | 2,688 |
| Subtotal | 3,708 | 4,067 |
| Other | 341 | 268 |
| Subtotal | 4,049 | 4,335 |
| REALIZED LOSSES | ||
| Available-for-sale investments | ||
| Equity securities | (226) | (271) |
| Debt securities | (355) | (503) |
| Subtotal | (581) | (773) |
| Other | (71) | (33) |
| Subtotal | (653) | (806) |
| Total | 3,397 | 3,529 |
| € mn | |
|---|---|
| Six months ended 30 June | 2018 | 2017 |
|---|---|---|
| PROPERTY-CASUALTY | ||
| Fees from credit and assistance business | 657 | 663 |
| Service agreements | 210 | 249 |
| Subtotal | 868 | 911 |
| LIFE/HEALTH | ||
| Service agreements | 65 | 60 |
| Investment advisory | 702 | 648 |
| Subtotal | 767 | 708 |
| ASSET MANAGEMENT | ||
| Management and advisory fees1 | 3,735 | 3,398 |
| Loading and exit fees | 280 | 283 |
| Performance fees | 166 | 149 |
| Other | 19 | 15 |
| Subtotal | 4,200 | 3,845 |
| CORPORATE AND OTHER | ||
| Service agreements | 727 | 750 |
| Investment advisory and banking activities | 316 | 388 |
| Subtotal | 1,043 | 1,138 |
| CONSOLIDATION | (1,150) | (1,012) |
| Total | 5,727 | 5,591 |
| 1_Includes effects from the application of IFRS 15 as described in note 2. |
| € mn | ||||
|---|---|---|---|---|
| Six months ended 30 June |
Property Casualty |
Life/Health | Consolidation | Group |
| 2018 | ||||
| Gross | (16,427) | (10,009) | 26 | (26,411) |
| Ceded | 669 | 272 | (24) | 916 |
| Net | (15,759) | (9,738) | 2 | (25,494) |
| 2017 | ||||
| Gross | (16,531) | (10,089) | 41 | (26,579) |
| Ceded | 975 | 251 | (41) | 1,185 |
| Net | (15,556) | (9,838) | - | (25,394) |
| € mn | ||||
|---|---|---|---|---|
| Six months ended 30 June |
Property Casualty |
Life/Health | Consolidation | Group |
| 2018 | ||||
| Gross | (197) | (5,838) | (35) | (6,070) |
| Ceded | 4 | 110 | - | 115 |
| Net | (193) | (5,728) | (35) | (5,956) |
| 2017 | ||||
| Gross | (261) | (6,605) | 35 | (6,832) |
| Ceded | 3 | 131 | - | 134 |
| Net | (258) | (6,474) | 35 | (6,697) |
| 2018 | 2017 |
|---|---|
| (44) | (75) |
| (25) | (21) |
| (121) | (119) |
| (300) | (315) |
| (25) | (51) |
| (514) | (582) |
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Impairments | ||
| Available-for-sale investments | ||
| Equity securities | (831) | (333) |
| Debt securities | (103) | (35) |
| Subtotal | (934) | (368) |
| Other | (13) | (6) |
| Subtotal | (946) | (374) |
| Reversals of impairments | 4 | 42 |
| Total | (943) | (332) |
€ mn
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Investment management expenses | (349) | (370) |
| Expenses from real estate held for investment | (173) | (177) |
| Expenses from fixed assets of renewable energy investments | (108) | (97) |
| Total | (630) | (644) |
| Six months ended 30 June | 2018 | 2017 |
|---|---|---|
| PROPERTY-CASUALTY | ||
| Acquisition costs | (5,075) | (5,128) |
| Administrative expenses | (1,582) | (1,611) |
| Subtotal | (6,657) | (6,739) |
| LIFE/HEALTH | ||
| Acquisition costs | (2,390) | (2,391) |
| Administrative expenses | (898) | (877) |
| Subtotal | (3,288) | (3,267) |
| ASSET MANAGEMENT | ||
| Personnel expenses | (1,253) | (1,185) |
| Non-personnel expenses | (757) | (767) |
| Subtotal | (2,010) | (1,952) |
| CORPORATE AND OTHER | ||
| Administrative expenses | (552) | (692) |
| Subtotal | (552) | (692) |
| CONSOLIDATION | (18) | (27) |
| Total | (12,525) | (12,678) |
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| PROPERTY-CASUALTY | ||
| Fees from credit and assistance business | (638) | (663) |
| Service agreements | (168) | (201) |
| Subtotal | (806) | (864) |
| LIFE/HEALTH | ||
| Service agreements | (34) | (34) |
| Investment advisory | (335) | (315) |
| Subtotal | (369) | (350) |
| ASSET MANAGEMENT | ||
| Commissions1 | (869) | (694) |
| Other | (82) | (76) |
| Subtotal | (951) | (769) |
| CORPORATE AND OTHER | ||
| Service agreements | (834) | (859) |
| Investment advisory and banking activities | (169) | (168) |
| Subtotal | (1,003) | (1,027) |
| CONSOLIDATION | 925 | 838 |
| Total | (2,204) | (2,172) |
| 1_Includes effects from the application of IFRS 15 as described in note 2. |
| Total | (1,340) | (1,585) |
|---|---|---|
| Deferred income taxes | (188) | (217) |
| Current income taxes | (1,153) | (1,367) |
| Six months ended 30 June | 2018 | 2017 |
| € mn |
For the six months ended 30 June 2018 and 2017, the income taxes on components of other comprehensive income consist of the following:
| € mn | ||
|---|---|---|
| Six months ended 30 June | 2018 | 2017 |
| Items that may be reclassified to profit or loss in future periods | ||
| Foreign currency translation adjustments | 59 | (50) |
| Available-for-sale investments | 924 | 245 |
| Cash flow hedges | 10 | 15 |
| Share of other comprehensive income of associates and joint ventures |
4 | 1 |
| Miscellaneous | 31 | 146 |
| Items that may never be reclassified to profit or loss | ||
| Changes in actuarial gains and losses on defined benefit plans |
(21) | (120) |
| Total | 1,008 | 237 |
€ mn
The following table compares the carrying amount with the fair value of the Allianz Group's financial assets and financial liabilities:
| As of 30 June 2018 | As of 31 December 2017 | ||||
|---|---|---|---|---|---|
| Carrying amount |
Fair value | Carrying amount |
Fair value | ||
| FINANCIAL ASSETS | |||||
| Cash and cash equivalents | 17,974 | 17,974 | 17,119 | 17,119 | |
| Financial assets held for trading | 3,343 | 3,343 | 3,076 | 3,076 | |
| Financial assets designated at fair value through income | 4,333 | 4,333 | 5,101 | 5,101 | |
| Available-for-sale investments | 519,795 | 519,795 | 520,397 | 520,397 | |
| Held-to-maturity investments | 2,720 | 2,947 | 2,678 | 2,992 | |
| Investments in associates and joint ventures | 10,774 | 13,012 | 9,010 | 11,059 | |
| Real estate held for investment | 11,551 | 19,291 | 11,419 | 18,913 | |
| Loans and advances to banks and customers | 106,669 | 120,943 | 104,224 | 119,934 | |
| Financial assets for unit-linked contracts | 120,402 | 120,402 | 119,141 | 119,141 | |
| Derivative financial instruments and firm commitments included in other assets | 438 | 438 | 538 | 538 | |
| FINANCIAL LIABILITIES | |||||
| Financial liabilities held for trading | 10,762 | 10,762 | 11,291 | 11,291 | |
| Liabilities to banks and customers | 13,767 | 13,736 | 12,746 | 12,759 | |
| Financial liabilities for unit-linked contracts | 120,402 | 120,402 | 119,141 | 119,141 | |
| Derivative financial instruments and firm commitments included in other liabilities | 280 | 280 | 147 | 147 | |
| Financial liabilities for puttable equity instruments | 1,845 | 1,845 | 2,640 | 2,640 | |
| Certificated liabilities | 9,205 | 9,924 | 9,596 | 10,459 | |
| Subordinated liabilities | 13,387 | 13,957 | 13,295 | 14,757 |
As of 30 June 2018, fair values could not be reliably measured for equity investments whose carrying amounts totaled € 132 mn (31 December 2017: € 73 mn). These investments are primarily investments in privately held corporations and partnerships.
The following financial assets and liabilities are carried at fair value on a recurring basis:
The following tables present the fair value hierarchy for financial instruments carried at fair value in the consolidated balance sheets as of 30 June 2018 and 31 December 2017:
€ mn
| As of 30 June 2018 | As of 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 11 | Level 22 | Level 33 | Total | Level 11 | Level 22 | Level 33 | Total | |
| FINANCIAL ASSETS | ||||||||
| Financial assets carried at fair value through income | ||||||||
| Financial assets held for trading | 655 | 2,684 | 4 | 3,343 | 347 | 2,716 | 13 | 3,076 |
| Financial assets designated at fair value through income | 3,054 | 1,114 | 165 | 4,333 | 3,876 | 1,076 | 150 | 5,101 |
| Subtotal | 3,709 | 3,798 | 169 | 7,676 | 4,223 | 3,792 | 162 | 8,177 |
| Available-for-sale investments | ||||||||
| Corporate bonds | 11,683 | 209,110 | 17,891 | 238,684 | 15,816 | 211,507 | 16,203 | 243,526 |
| Government and government agency bonds | 16,811 | 181,657 | 731 | 199,200 | 30,884 | 167,449 | 578 | 198,911 |
| MBS/ABS | 46 | 22,299 | 168 | 22,514 | 45 | 21,406 | 182 | 21,633 |
| Other | 789 | 975 | 4,042 | 5,807 | 694 | 899 | 3,577 | 5,169 |
| Equity securities | 41,231 | 817 | 11,543 | 53,590 | 40,247 | 788 | 10,122 | 51,158 |
| Subtotal | 70,560 | 414,858 | 34,376 | 519,795 | 87,687 | 402,048 | 30,661 | 520,397 |
| Financial assets for unit-linked contracts | 96,178 | 23,493 | 731 | 120,402 | 95,224 | 23,324 | 592 | 119,141 |
| Derivative financial instruments and firm commitments included in other assets |
6 | 432 | - | 438 | 1 | 537 | - | 538 |
| Total | 170,453 | 442,581 | 35,277 | 648,311 | 187,135 | 429,701 | 31,416 | 648,252 |
| FINANCIAL LIABILITIES | ||||||||
| Financial liabilities carried at fair value through income | 83 | 1,791 | 8,889 | 10,762 | 34 | 1,139 | 10,118 | 11,291 |
| Financial liabilities for unit-linked contracts | 96,178 | 23,493 | 731 | 120,402 | 95,224 | 23,324 | 592 | 119,141 |
| Derivative financial instruments and firm commitments included in other liabilities |
1 | 280 | - | 280 | 1 | 146 | - | 147 |
| Financial liabilities for puttable equity instruments | 1,505 | 139 | 201 | 1,845 | 2,377 | 87 | 175 | 2,640 |
| Total | 97,766 | 25,703 | 9,821 | 133,290 | 97,637 | 24,697 | 10,886 | 133,220 |
| 1_Quoted prices in active markets. 2_Market observable inputs. |
3_Non-market observable inputs.
The valuation methodologies used for financial instruments carried at fair value, the policy for determining the levels within the fair value hierarchy, as well as the significant Level-3 portfolios, including the respective narratives and sensitivities, are described in the Allianz Group's Annual Report 2017. No material changes have occurred since this report was published.
In general, financial assets and liabilities are transferred from level 1 to level 2 when liquidity, trade frequency, and activity are no longer indicative of an active market. In 2018, this mainly affects a government bond portfolio with a transfer volume of € 13 bn for which now mainly composite prices are used. Conversely, the converse policy applies for transfers from level 2 to level 1.
The following tables show reconciliations of the financial instruments carried at fair value and classified as level 3.
€ mn
| Financial assets carried at fair value through income |
Available-for-sale investments – Debt securities1 |
Available-for-sale investments – Equity securities |
Financial assets for unit-linked contracts |
Total | |
|---|---|---|---|---|---|
| Carrying value (fair value) as of 1 January 2018 | 162 | 20,539 | 10,122 | 592 | 31,416 |
| Additions through purchases and issues | 16 | 2,534 | 1,771 | 104 | 4,425 |
| Net transfers into (out of) Level 3 | 1 | 63 | 36 | 60 | 161 |
| Disposal through sales and settlements | 124 | (477) | (524) | (15) | (892) |
| Net gains (losses) recognized in consolidated income statement | (133) | 47 | 55 | 6 | (25) |
| Net gains (losses) recognized in other comprehensive income | - | (147) | 234 | - | 87 |
| Impairments | - | (26) | (191) | - | (217) |
| Foreign currency translation adjustments | (1) | 283 | 34 | (17) | 300 |
| Changes in the consolidated subsidiaries of the Allianz Group | - | 17 | 4 | 1 | 22 |
| Carrying value (fair value) as of 30 June 2018 | 169 | 22,833 | 11,543 | 731 | 35,277 |
| Net gains (losses) in profit or loss attributable to a change in unrealized gains or losses for financial assets held at the reporting date |
(10) | 37 | - | 6 | 33 |
| 1_Primarily include corporate bonds. |
| € mn | ||||
|---|---|---|---|---|
| Financial liabilities carried at fair value through income |
Financial liabilities for unit-linked contracts |
Financial liabilities for puttable equity instruments |
Total | |
| Carrying value (fair value) as of 1 January 2018 | 10,118 | 592 | 175 | 10,886 |
| Additions through purchases and issues | 449 | 104 | 26 | 579 |
| Net transfers into (out of) Level 3 | - | 60 | - | 60 |
| Disposal through sales and settlements | (445) | (15) | - | (460) |
| Net losses (gains) recognized in consolidated income statement | (1,445) | 6 | - | (1,439) |
| Net losses (gains) recognized in other comprehensive income | - | - | - | - |
| Impairments | - | - | - | - |
| Foreign currency translation adjustments | 211 | (17) | - | 194 |
| Changes in the consolidated subsidiaries of the Allianz Group | - | 1 | - | - |
| Carrying value (fair value) as of 30 June 2018 | 8,889 | 731 | 201 | 9,821 |
| Net losses (gains) in profit or loss attributable to a change in unrealized gains or losses for financial liabilities held at the reporting date |
(1,583) | 6 | - | (1,576) |
Certain financial assets are measured at fair value on a non-recurring basis when events or changes in circumstances indicate that the carrying amount may not be recoverable. If financial assets are measured at fair value on a non-recurring basis at the time of impairment, or if fair value less cost to sell is used as the measurement basis under IFRS 5, corresponding disclosures can be found in note 26.
As of 30 June 2018, there were no significant changes in contingent liabilities, compared to the consolidated financial statements for the year ended 31 December 2017.
The following table shows the composition of purchase obligations as of 30 June 2018:
| € mn | ||
|---|---|---|
| As of 30 June 2018 |
As of 31 December 2017 |
|
| Commitments to acquire interests in associates and available for-sale investments |
13,613 | 16,001 |
| Debt investments | 8,005 | 6,392 |
| Other | 3,110 | 3,193 |
| Total | 24,728 | 25,586 |
All other commitments had no significant changes.
On 4 July 2018, Allianz SE started a new share buy-back program with a volume of up to € 1 bn. The program shall be finalized by 30 September 2018. Allianz SE will cancel all repurchased shares.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the condensed consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Munich, 2 August 2018
Allianz SE The Board of Management
Oliver Bäte Sergio Balbinot
Dr. Christof Mascher Niran Peiris
Dr. Günther Thallinger Dr. Axel Theis
Jacqueline Hunt Dr. Helga Jung
We have reviewed the condensed consolidated interim financial statements – comprising the consolidated balance sheets, consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flows and selected explanatory notes – and the interim group management report of Allianz SE, Munich, for the period from 1 January to 30 June 2018 which are part of the half-year financial report pursuant to § (Article) 115 WpHG ("Wertpapierhandelsgesetz": German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the parent Company's Board of Managing Directors. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Munich, 2 August 2018
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
Richard Burger Julia Unkel Wirtschaftsprüfer Wirtschaftsprüferin (German Public Auditor) (German Public Auditor)
Important dates for shareholders and analysts1
| Financial Results 3Q____________ | 9 November 2018 |
|---|---|
| Financial Results 2018 _________________15 |
February 2019 |
| Annual Report 2018 ________________ |
8 March 2019 |
| Annual General Meeting ______________8 |
May 2019 |
| Financial Results 1Q_________________14 | May 2019 |
| Financial Results 2Q/Interim Report 6M | __________ 2 August 2019 |
| Financial Results 3Q____________ | 8 November 2019 |
1_The German Securities Trading Act ("Wertpapierhandelsgesetz") obliges issuers to announce immediately any information which may have a substantial price impact. Therefore we cannot exclude that we have to announce key figures related to quarterly and financial-year results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them on the internet at www.allianz.com/financialcalendar.
Allianz SE – Königinstrasse 28 – 80802 Munich – Germany – Phone +49 89 3800 0 – [email protected]m – www.allianz.com Front page design: hw.design GmbH – Typesetting: Produced in-house with firesys Interim Report on the internet: www.allianz.com/interim-report – Date of publication: 3 August 2018 This is a translation of the German Interim Report of Allianz Group. In case of any divergences, the German original is legally binding.
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